Lately, there's been a lot of controversy around selling on Groupon and selling your products on other daily deal sites. Some merchants are losing money and have almost gone out of business because they couldn't handle the traffic/sales that they received. Others have gained lots of new, repeat clients and would do it all over again!
When I owned Tees For Change I decided to give it a try and I worked with daily deal sites like zulily.com, plumdistrict.com, and TheMiniSocial.com. I had great experiences with all of them, but that's because this form of marketing made sense for me and my company's pricing. Had I priced my products lower, I could have lost a ton of money.
Here are some of the ways I benefited from daily deal sites:
1) Move excess inventory and gain brand exposure
We’ve all been there: It’s time to bring in the next season’s stock, but your stock room is still full of last season! Working with a daily deal site can move your old stock faster than a sale on your own site because you can reach a huge base of customers who otherwise might never hear of your product.
Not all of the customers will redeem right away, but be prepared for at least 50% to redeem within a day or two of the sale to be sure you can meet the demand.
2) Find new customers in your target market
Kathy’s product The Dot Girl First Period Kit is geared toward moms of tweens, so when she was offered a deal on Mamasource by Mamapedia she couldn’t pass it up.
“The opportunity to place The Dot Girl First Period Kit in front of so many women at once without any upfront costs was too tempting to pass by,” she says. Many of her visitors bought additional products, making the next two months her highest grossing.
3) Make a lot of money in a little time
Teresa from Bruce Lemier Photography did a deal with Living Social in New York for a one-hour boudoir photography session.
“We were thrilled with the results—total revenue of more than $18,000, and we're still receiving calls from interested customers who missed the deal,” she says.
She did another deal with the site last month and sold 770 sessions in only 48 hours!
4) Increase newsletter subscribers and Twitter and Facebook followers
One of the benefits of participation in the deal is collecting your new customers’ information. David of the deal site DailyGourmet.com says that this information is key to making the most of your deal by allowing you to keep your new clients coming back to your site.
While all of my experiences with daily deal sites were positive, they’re not perfect for every business.
Businesses with high variable costs, limited ability to collect customer information to influence future purchases, and limited capacity/ availability to control when buyers show up are not ideal for daily deals.
“It could still make sense – but the business has to be careful to structure the deal correctly (and to do the necessary things post-deal to drive more value).” says David of Daily Gourmet.
“A business that is a great natural fit is one that runs events – once the event is taking place, filling up any seat that would otherwise go empty is pure gain, plus being able to collect email addresses of attendees to invite them to subsequent events is also a big plus.”
“On the other side, a small restaurant that has high food costs and that cannot normally collect info on customers is going to have a harder time making it work.”
If your business is suited to a deal, make sure you can actually afford the terms of the deal. “Run the numbers using a high, medium, and low result,” says Lea of Pig of the Month BBQ. “See if you can honestly afford to honor 500 vouchers.”
She also suggests entrepreneurs do their research and negotiate.
“You can get 65/35 and 60/40 splits without much negotiation at all. The deal site should be paying the credit card processing fees, don't let them tell you otherwise,” she adds.
I’d love to hear your experiences with daily deal sites in the comments section.
We use Zulily.com as an outlet for our products and have found it works well for us.
Price-wise we just cover our costs, so not huge margins at all, but we feel it is better that our products get into the families homes and do the advertising for us.
We feel this is better advertising for us than huge costly magazine adverts.
Better that our reward charts are in the family homes rather than stuck on our warehouse shelves.