The future of Group Buying
Group Buying through deal sites is a tough industry and the phenomenon has taken Australia by storm. Currently in excess of 3 million Australians receive some form of a daily alert from a Group Buying site. This form of email advertising is bigger than any radio, television or newspaper outlet and its consumer reach is growing at an exponential rate. Every day a new site pops up but that is also the death of another site that has decided the time, the money and energy required make it just too difficult to make a dollar.
It is hugely competitive amongst the group buying websites (there are about 80 in place now) but with monetary success comes the inevitable problem of dealing with customer satisfaction. This is an area that most of the 'big five' group buying websites have not dealt with well. You only have to pick up the paper, watch TV or look at some of the numerous online forums to see that on a public relations platform none of these companies are doing well. There has been a shift in trend since 12 months ago which saw group buying sites getting an enormous ovation and positive attention. Now there seems to be an avalanche of negativity and indifference. It doesn't help that media owners of deal sites take pot shots at their rivals from time to time.
How did it get here and what is the future of Group Buying websites?
Simply, the competition and the investment made by some very large media houses have resulted in unrealistic merchant expectations where over-ambitious deals are made which merchants simply cannot honour due to the sheer number of purchases.
It is simple economics and human behaviour. The deal sites need to sell a lot of coupons to cover their costs which include staff, advertising, continual online development, partners and suppliers. The sales people are instructed that more is better. In fact the term ‘whale deal’ is a deal that is grossly in the deal site’s favour, where there is so much cash coming in and there is no restriction or cap on the deals it is easy to see why some merchants are swamped and unable to deliver on their arrangement with the consumer. The merchant who is now overwhelmed with people that have purchased their product or service for half price are over extended trying to deliver, often resulting in a sub-standard or stressful delivery which results in both consumer and merchant walking away from the experience with disdain and regret.
The model used by many of the smaller deal sites, such as boutique group buying site Deal2Day, is where true value and the concept of ‘Group Buying’ lives: excellent customer relations, quality products and services, manageable numbers, real clients and consumers, honest and open discussion between the merchant and consumer. Ultimately the true reward for both the merchant and consumer is real customer service. Without it you should be asking yourself why are you in business in the first place. In the eleven months that Deal2Day has been in operation, it has received seven complaints and all were dealt with promptly and with courtesy, a far cry from those complaints that we are seeing in the media about other companies.
Online deal sites are here to stay and will continue to grow. The key to success for all involved is to work with manageable numbers.
For the merchant: don’t be a victim of a ‘whale deal’ and make sure you understand all the payment and deal terms. Many have suffered for not reading the fine print.
For the consumer; a good deal is only good if you need it or really want it. Make sure you read the terms and conditions of the deal and look to more localised deals in your area. There's no point saving $30 off a manicure if you have to travel across town to get it wasting petrol and time. A deal is a great opportunity to try businesses in your local area that you may want to revisit.
2012 will see a shift in the daily deal industry. The merchant will be more in control and hence a better product and service will be delivered by them. This will spark a resurgence in the industry as ‘bargain hunters’ will be reduced with real bona-fide potential customers. The deal sites will get back to what they were designed to do and get people through the merchants’ doors. The merchants will work hard to make the experience such a good one the consumer will be won over. As for deal sites, well they would want to pull their finger out and realise their clients are both the consumer and the merchant. Good customer service is the minimum requirement here with excellent customer service the ultimate goal.
