One deal a day
Encyclopedia
Deal of the day is a type of ecommerce in which a website
offers a single product for sale for a period of 24 to 36 hours. Members of deal of the day websites receive online offers and invitations in postal mail, email
and social networks.
Established retailers, such as Amazon.com
and Buy.com
, feature a deal of the day item in addition to more conventional sales methods.
The deal of the day business model
grew out of the 2009 recession and gained increasing popularity in 2010, highlighted by Google
making an unsuccessful offer to buy the largest deal of the day business Groupon
for a reported $6 billion. This offer not only raised public awareness of the deal of the day concept, but also led to increased investment interest in new daily deal startups. , deal of the day sites have continued to grow in popularity, while new fears have arisen over the longevity of the concept and financial viability of one day deals for small businesses.
The majority of deal of the day sites work directly with local businesses and online retailers to develop a deal offering which includes a significant discount against regular RRP
for a particular product. Using the group buying
methodology a minimum and maximum number of deals are made available for sale within a period of time. Typically, deal of the day sites segment merchandise by specific designer sales. Traditionally this period is 24 hours, although increasingly daily deals websites are offering alternative, longer deal formats to maximise profits and allow them to run multiple deals in a single location concurrently.
When a deal goes live on the website past customers and email subscribers are sent the offer. Customers purchase the deal on the deal of the day website (rather than directly from the supplier). Crucially this means the deals website retains customer data rather than the company offering the deal.
Once the minimum number of deals have been sold via the website customers' credit cards are charged and the deal is delivered as an electronic voucher which can be redeemed from the supplier. Vouchers purchased from daily deals websites typically expires after a certain period of time.
in France. The company
was developed in an online environment to host sales of designer brands for members, with reduced prices. These sales include a diverse selection of product categories: fashion
, accessories, toys, watches, home appliances, sports equipment, technology and wines. Copying the model set forth by Jacques-Antoine Granjon, several U.S. "private sale" businesses have been founded in recent years. The deal of the day concept gained popularity with the launching of Woot.com
in July 2004 (although that itself was a modified version of earlier dot-com-bubble sales by sites like uBid
). By late 2006, the deal of the day industry had exploded, with more than 100 deal-a-day sites in existence. In November 2008, Groupon entered the market and became the second fastest online company to reach a billion dollar valuation. Deal of the day websites are poised for a major expansion in US in the coming years. According to a study released by BIA/Kelsey, gross revenues are projected to grow from a current $873 million to $3.9 billion by 2015.
Other notable online businesses including Facebook
have launched and later withdrawn their own daily deals offering websites. The rise of social networks such as Myspace
and Facebook has accelerated the growth of daily deals sites with popular deals spreading virally via these online networks.
The increase in venture capital injections and startup launches also exemplify the continued growth in the industry. Some examples of such activity are the recent launches of Facebook, Amazon, Google and AT&T’s daily deal sites. Groupon is also continuing on its track to file for an IPO.
Despite positive growth figures, there are studies that suggest that there is a structural weakness to the industry that will have to be addressed in the coming years. These shortcomings fall on both the consumer and merchant side. For example, deal users very rarely return for a full price purchase and large percentage of businesses indicate their disinterest in running another deal in the future. For these reasons, the industry will require some testing and evolution and these daily deal sites will have to settle for lower shares of revenues from businesses compared to their current levels (20-50%) which are not sustainable It is unclear whether industry diversification, increasing competition, and larger revenue shares for merchants will disrupt the major players or cannibalize the industry as a whole.
A study of small businesses revealed that on average, daily deals spending is the single largest expenditure in a company’s marketing budget at 23.5% which translates to average annual spending on daily deal programs of $46,530. These numbers compare to other marketing expenditures such as email promotions (16.1% or $31,878) and online search advertising through programs such as Google AdSense (14.7% or $29,106).
feeds, so that anyone with an RSS Reader can view the most recent deal.
program, which allows third party websites to be compensated monetarily for referring visitors. This has increased the presence of the deal of the day websites on the Internet as well as a number of aggregation websites. These websites, such as Yipit, display syndicated offers from a number of deals sites. The service offers customized emails based on location and which categories of deal a user is interested in receiving. The aggregator takes a percentage of any sales made by the deal site through their affiliate program.
Some daily deal websites don't work with aggregators. For example, Livingsocial does not share profits for business that derives from aggregator sites. In Australia, where the daily deals industry is segmented with six major players, aggregators are treated as competitors.
s were considered beneficial to the deal of the day model. Because forums are generally uncensored, even when posts negatively impact products being sold or the reputation of the seller, they can serve as unpaid salesmen who explain the features of a product to potential customers. Customers benefit as they make more informed choices. The sellers benefit as customers that would be disappointed with a product and might seek to return it or require tech support simply do not buy it.
The use of Internet forums by deals websites has been fazed out as the medium has developed. Most pure play daily deals websites no longer feature a forum on their websites.
, 8coupons
, AppSumo
, Bergine
, BuyWithMe
, Google Offers
, Groupon MyCityDeal, Jasmere.com
, LivingSocial
, Newegg
, OfficeArrow
, Plum district
, Pop Market
, Sheeel
, StealTheDeal
, TeamBuy
, Thrillist
, WagJag
, and Woot
.
Website
A website, also written as Web site, web site, or simply site, is a collection of related web pages containing images, videos or other digital assets. A website is hosted on at least one web server, accessible via a network such as the Internet or a private local area network through an Internet...
offers a single product for sale for a period of 24 to 36 hours. Members of deal of the day websites receive online offers and invitations in postal mail, email
Email
Electronic mail, commonly known as email or e-mail, is a method of exchanging digital messages from an author to one or more recipients. Modern email operates across the Internet or other computer networks. Some early email systems required that the author and the recipient both be online at the...
and social networks.
Established retailers, such as Amazon.com
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
and Buy.com
Buy.com
Buy.com, Incorporated is an online retailer based in Aliso Viejo, California.Buy.com began by selling computers and electronics in 1997 and has since expanded into many other categories...
, feature a deal of the day item in addition to more conventional sales methods.
The deal of the day business model
Business model
A business model describes the rationale of how an organization creates, delivers, and captures value...
grew out of the 2009 recession and gained increasing popularity in 2010, highlighted by Google
Google
Google Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...
making an unsuccessful offer to buy the largest deal of the day business Groupon
Groupon
Groupon is a deal-of-the-day website that features discounted gift certificates usable at local or national companies. Groupon was launched in November 2008, the first market for Groupon was Chicago, followed soon thereafter by Boston, New York City, and Toronto...
for a reported $6 billion. This offer not only raised public awareness of the deal of the day concept, but also led to increased investment interest in new daily deal startups. , deal of the day sites have continued to grow in popularity, while new fears have arisen over the longevity of the concept and financial viability of one day deals for small businesses.
Business model overview
The deal of the day business model benefits both retailers and consumers as retailers build brand loyalty and while quickly moving surplus inventory.The majority of deal of the day sites work directly with local businesses and online retailers to develop a deal offering which includes a significant discount against regular RRP
RRP
RRP can stand for:*Recommended retail price*Radical right-wing populism*Recurrent Respiratory Papillomatosis*Rembrandt Research Project*Richard Parry *Richard Rogers Partnership, now known as Rogers Stirk Harbour + Partners...
for a particular product. Using the group buying
Group buying
Group buying, also known as collective buying, offers products and services at significantly reduced prices on the condition that a minimum number of buyers would make the purchase...
methodology a minimum and maximum number of deals are made available for sale within a period of time. Typically, deal of the day sites segment merchandise by specific designer sales. Traditionally this period is 24 hours, although increasingly daily deals websites are offering alternative, longer deal formats to maximise profits and allow them to run multiple deals in a single location concurrently.
When a deal goes live on the website past customers and email subscribers are sent the offer. Customers purchase the deal on the deal of the day website (rather than directly from the supplier). Crucially this means the deals website retains customer data rather than the company offering the deal.
Once the minimum number of deals have been sold via the website customers' credit cards are charged and the deal is delivered as an electronic voucher which can be redeemed from the supplier. Vouchers purchased from daily deals websites typically expires after a certain period of time.
History
The online "private sale" industry emerged in 2001, when French Entrepreneur, Jacques-Antoine Granjon, founded a company called Vente-privee.comVente-privee.com
The private shopping club vente-privee.com deals in the concept of online retailing. The company was developed in an online environment to host sales of designer brands for members, with reduced prices...
in France. The company
Company
A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...
was developed in an online environment to host sales of designer brands for members, with reduced prices. These sales include a diverse selection of product categories: fashion
Fashion
Fashion, a general term for a currently popular style or practice, especially in clothing, foot wear, or accessories. Fashion references to anything that is the current trend in look and dress up of a person...
, accessories, toys, watches, home appliances, sports equipment, technology and wines. Copying the model set forth by Jacques-Antoine Granjon, several U.S. "private sale" businesses have been founded in recent years. The deal of the day concept gained popularity with the launching of Woot.com
Woot (retailer)
Woot is an American Internet retailer based in the Dallas suburb of Carrollton, Texas. It was founded by electronics wholesaler Matt Rutledge and debuted on July 12, 2004. Woot's main website generally offers only one discounted product each day, often a piece of computer hardware or an electronic...
in July 2004 (although that itself was a modified version of earlier dot-com-bubble sales by sites like uBid
UBid
uBid.com manages an online auction and shopping website that offers both goods sold directly by the company and items sold by pre-approved uBid Certified Merchants.-Overview:...
). By late 2006, the deal of the day industry had exploded, with more than 100 deal-a-day sites in existence. In November 2008, Groupon entered the market and became the second fastest online company to reach a billion dollar valuation. Deal of the day websites are poised for a major expansion in US in the coming years. According to a study released by BIA/Kelsey, gross revenues are projected to grow from a current $873 million to $3.9 billion by 2015.
Other notable online businesses including Facebook
Facebook
Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...
have launched and later withdrawn their own daily deals offering websites. The rise of social networks such as Myspace
Myspace
Myspace is a social networking service owned by Specific Media LLC and pop star Justin Timberlake. Myspace launched in August 2003 and is headquartered in Beverly Hills, California. In August 2011, Myspace had 33.1 million unique U.S. visitors....
and Facebook has accelerated the growth of daily deals sites with popular deals spreading virally via these online networks.
Industry outlook
While 2010 marked a year of rapid growth, more recently weeks the daily deal promotion industry has begun to level off considerably. Regardless, revenue forecasts for the industry continue to foresee strong growth. By the end of 2011 analysts predict that industry revenues will reach several billion dollars at an increasing at annual rates in excess of 100%.The increase in venture capital injections and startup launches also exemplify the continued growth in the industry. Some examples of such activity are the recent launches of Facebook, Amazon, Google and AT&T’s daily deal sites. Groupon is also continuing on its track to file for an IPO.
Despite positive growth figures, there are studies that suggest that there is a structural weakness to the industry that will have to be addressed in the coming years. These shortcomings fall on both the consumer and merchant side. For example, deal users very rarely return for a full price purchase and large percentage of businesses indicate their disinterest in running another deal in the future. For these reasons, the industry will require some testing and evolution and these daily deal sites will have to settle for lower shares of revenues from businesses compared to their current levels (20-50%) which are not sustainable It is unclear whether industry diversification, increasing competition, and larger revenue shares for merchants will disrupt the major players or cannibalize the industry as a whole.
Marketing
Most businesses who run one day deals via daily deals websites consider it a marketing activity rather than a means of generating profit. The benefit for businesses is exposure of their product or service to a large number of customers in a short period of time. Studies show that there is evidence of significant exposure value (increase in sales because of exposure received) from running a one day deal. One small business reported an increase in exposure value of approximately 140% over its baseline sales over a six month period. Beyond mere exposure, businesses hope to capitalize on the long-term lifetime value of new repeat customers, representing a shift from traditional marketing and advertising. While the primary purpose of deal of the day sites is as an e-commerce platform, they can also serve as marketing and media platforms.A study of small businesses revealed that on average, daily deals spending is the single largest expenditure in a company’s marketing budget at 23.5% which translates to average annual spending on daily deal programs of $46,530. These numbers compare to other marketing expenditures such as email promotions (16.1% or $31,878) and online search advertising through programs such as Google AdSense (14.7% or $29,106).
Profitability
As mentioned, businesses run daily deals to gain exposure not revenues. When the deep discount and payout to the deal of the day site is taken into account, the business running the promotion can often be left with insufficient revenues to reach profitability. Another negative effect on profitability is the type of consumers attracted by daily deals. Oftentimes the those who purchase a daily deal are “price-sensitive deal-seekers” who are less apt to return to the business in the future to buy at full price. Regardless of these facts, studies have shown that for small businesses and start-up companies, daily deals can result in a substantial 30% lift in profits compared to baseline levels. A survey of businesses who ran daily deals in the past year revealed the following data on the incidence of profitability: on average, over half (55.5%) made money on their daily deal promotion, whereas just over a quarter or 26.6% lost money. The remainder, 17.9% broke even, neither making nor losing money.”Communication tools
One of the most notable features of the deal of the day format is the use of email marketing to promote new deals to past customers or other subscribers. The practice of sending daily or multiple daily email messages to mailing lists to promote new deals has been widely criticised by email marketing professionals and users. However evidence would suggest this aggressive strategy is affective at generating sales and visitors can sign up to receive an email every day or week to be notified of the deal. Most large daily deal websites publish their deals via RSSRSS
-Mathematics:* Root-sum-square, the square root of the sum of the squares of the elements of a data set* Residual sum of squares in statistics-Technology:* RSS , "Really Simple Syndication" or "Rich Site Summary", a family of web feed formats...
feeds, so that anyone with an RSS Reader can view the most recent deal.
Common products
- Special events
- Tourism-related services
- Education services
- Health and fitness services
- Medical services
- Auto services
- Retail store
- Salon and spa
- Restaurant and bars
Affiliates
Most daily deal websites have an affiliate marketingAffiliate marketing
Affiliate marketing is a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's own marketing efforts...
program, which allows third party websites to be compensated monetarily for referring visitors. This has increased the presence of the deal of the day websites on the Internet as well as a number of aggregation websites. These websites, such as Yipit, display syndicated offers from a number of deals sites. The service offers customized emails based on location and which categories of deal a user is interested in receiving. The aggregator takes a percentage of any sales made by the deal site through their affiliate program.
Some daily deal websites don't work with aggregators. For example, Livingsocial does not share profits for business that derives from aggregator sites. In Australia, where the daily deals industry is segmented with six major players, aggregators are treated as competitors.
Online forums
Initially, Internet forumInternet forum
An Internet forum, or message board, is an online discussion site where people can hold conversations in the form of posted messages. They differ from chat rooms in that messages are at least temporarily archived...
s were considered beneficial to the deal of the day model. Because forums are generally uncensored, even when posts negatively impact products being sold or the reputation of the seller, they can serve as unpaid salesmen who explain the features of a product to potential customers. Customers benefit as they make more informed choices. The sellers benefit as customers that would be disappointed with a product and might seek to return it or require tech support simply do not buy it.
The use of Internet forums by deals websites has been fazed out as the medium has developed. Most pure play daily deals websites no longer feature a forum on their websites.
Example websites
Some example deal of the day websites are 1saleaday1saleaday
1SaleADay is an Internet retailer with a deal-a-day format. The site was founded in 2007 by Ben Federman. 1SaleADay's main site offers one discounted item a day, the product can vary from a computer-related product to a magazine subscription. Products are listed at up to 80-90% off retail....
, 8coupons
8coupons
8coupons is a New York-based deal aggregator website that distributes deal updates and digital coupons to consumers based on weekly top deals, customized online feeds, or the user's current location....
, AppSumo
AppSumo
AppSumo is a daily deals website for web applications and online services open to markets worldwide. Often, the company will offer one web application to potential buyers, but also offers product bundles for multiple applications that can work in conjunction with each other.-Company:AppSumo, which...
, Bergine
Bergine
Bergine launched in March 2010 as the first luxury deal-of-the-day site in the United States. Co-founded by husband/wife team Ian Picache and Patricia Calfee, Bergine provided daily "flash-sale" offers to restaurants, spas and boutiques at up to 70% off retail prices...
, BuyWithMe
BuyWithMe
BuyWithMe is a group buying website allowing consumers to leverage group buying power to get discounts with local merchants. The company is headquartered in New York City. Funding was obtained via a group of angel investors. BuyWithMe's first market was Boston, where restaurants including UFood...
, Google Offers
Google Offers
Google Offers is a deal-of-the-day website that will be localized to major geographic markets in the United States and abroad. Google confirmed the website in January 2011, after an attempted buyout by Google of established competitor Groupon for a reported sum of US$ 6 billion was turned down...
, Groupon MyCityDeal, Jasmere.com
Jasmere.com
Jasmere.com is a deal-of-the-day website with a format similar to Groupon.com.Jasmere sells merchandise from upscale though lesser-known vendors. It offers discounts of 50-70% off the regular retail prices...
, LivingSocial
LivingSocial
-Business model:LivingSocial offers a new deal each day to its members who subscribe via email. Once a deal has been purchased, members are e-mailed their redemption vouchers the following business day, around 5 a.m. local time...
, Newegg
Newegg
Newegg.com Inc. is an online retailer of computer hardware and software. It is based in City of Industry, California. The company was founded by Fred Chang, a Taiwanese immigrant, in 2001.- History :...
, OfficeArrow
OfficeArrow
OfficeArrow is a business-to-business social media platform that is currently localized to the United States, providing a deal-of-the-day product, discount purchasing club, professionally sourced educational content, community discussion forums, and social functionality targeted towards...
, Plum district
Plum district
Plum District is a group buying website that focuses on mothers and their buying power. The company is headquartered in San Francisco and offers deals in North America as a 'Everywhere Deal' and in local markets including San Francisco, New York, Chicago, Los Angeles, and Seattle.In March 2011, the...
, Pop Market
Pop Market
PopMarket is a deal-of-the-day website launched by Sony Music Entertainment in November 2010 that offers 24-hour deep discounts on albums, box sets, and merchandise to its members from major music artists and bands like Santana, Johnny Cash, Miles Davis, and Pearl Jam...
, Sheeel
Sheeel
Sheeel.com is a Kuwaiti deal-of-the-day website generally offering one discounted product a day, covering several categories such as, Electronics, Household Goods, and Toys...
, StealTheDeal
StealTheDeal
StealTheDeal is a deal-a-day website similar to Groupon. It is notable for being the first Canadian website of its kind.StealTheDeal hosts a new deal for purchase everyday in most major cities across Canada...
, TeamBuy
TeamBuy
-Background:TeamBuy.ca was founded in October 2009 by Toronto based entrepreneurs Edward Yao and Andrew Hutchings. TeamBuy.ca is credited with being the first to market in Canada, gaining first mover advantage. TeamBuy.ca is distinct from some of its competitors as it is both owned and operated in...
, Thrillist
Thrillist
Thrillist is a leading men's lifestyle brand, currently reaching over 3 million subscribers in 19 local markets in the U.S. and the U.K.Best known for its irreverent tone, Thrillist delivers a targeted recommendation via one email each day to its audience of mostly young, well-educated, affluent...
, WagJag
WagJag
- WagJag overview :WagJagis an online service which offers various goods at reduced prices. It does so with the power of "combined purchasing power," the idea that prices drop when the good is bought en masse, as opposed to individually. The WagJag company started operating in late 2009 with its...
, and Woot
WOOT
Woot usually refers to the slang term, w00t. Woot may also refer to:* Woot, an e-commerce retailer that offers one deal a day to its consumers* WOOT-LP, a defunct television station in Chambersburg, Tennessee...
.