These days you know about one more model which is “Deal of the Day”. Now before going out of home you check for the deals through N number of sites online. Apart from daily deal you can also get the real time deals available thru Groupon. Companies in this market are going more real time and planning to come up with the real time deals based upon the customer’s interest, customer volume at particular time and even on the customer’s interest based on the season….
In this volatile economy when you think about your daily expenses you are pretty surprised with the daily activities going on and you think “Is $15 worth for this deal?”. With the recent economy turmoil the question of “is this item worth the value” has become even more important and the recent success of daily deal sites like Groupon, LivingSocial, and BuyWithMe can be attributed to this phenomena.
When a vendor thinks about the competitive market one think which comes into their mind is “How to get new customers?”
Answer seems to be “Daily Deal Model”.
These daily deals companies collects personal information from willing consumers and then only contacts those consumers, primarily by emails, face book etc. Then they breaks into new markets by identifying successful local businesses, first by sending their employees to research the local market; when it finds a business with outstanding reviews, salespeople approach it and explain the model, and use social marketing sites such as Face book, Twitter to further promote the idea.
Well these daily deals model took over the traditional advertisement in which vendor does not have to pay any upfront cost to participate and using this model they will get a whole lot of customers on their door which they might not get with the traditional marketing. But again a key point “No guarantees if they will ever come back, but they will come at least once.”
According to one of the Mr. Agarwal’s blog:
Merchants need to know two key numbers-
1) The proportion of Groupon customers who are already their customers
2) How often new customers come back.
The higher the first number, the worse their deal will perform. The higher the second number, the better their deal does.
Statistics of Daily Deal Model:
According to a survey done by Prof. Utpal from Rice University- In a survey-based study of 324 businesses that conducted a daily deal promotion between August 2009 and March 2011, 55.5% of businesses reported making money, 26.6% lost money and 17.9% broke even on their promotions. Although close to 80% of deal users were new customers, significantly fewer users spent beyond the deal’s value or returned to purchase at full price. 48.1% of businesses indicated they would run another daily deal promotion, 19.8% said they would not, and 32.1% said they were uncertain.
This industry is a hotbed of investment and there is not doubt that along with the Groupon filling an IPO, Facebook, Living Social, and Google have already launched the daily deals eComm websites and many start ups continue to be launch their will be a time when the businesses all over the US will be making decision whether to run their promotion or not and if yes, then with which deal’s site they should go on.
On the contrary great analysis has been done over the sustainability of this model and this model came under a lot more scrutiny after the intended Groupon IPO filing. Some of the analysis revolves around the financial numbers –
1) The sequential growth rate that has been projected
2) Explosive growth of the employee base
3) Gift card liability on the books
4) Customer acquisition and retaining costs
Agarwal’s Blog has links to a bunch of articles that dissects this model. But for now this industry is a hotbed of investments. We are seeing plethora of other players like Facebook, Living Social, and Google have already launched the daily deals websites and many other startups continue to launch. Now time will tell whether the social buying phenomenon are another social fad or is this model is here for people to adopt and adapt.
Growth of this model:
This business model was made popular by Groupon that started its operations in Chicago around 2007 and with other players jumping onto the bandwagon. The beauty of this model is that one can start operations with less than 2k in investment – a website and couple of hours of free time every evening to go around local businesses to procure deals. This led to mushrooming of sites across the world and spawned another industry all together – deal aggregators which include Yipit, Deal Nation, Dealery etc. As for the recent mark there are over 400+ sites that are listed on Yipit and many more coming up daily. Most of these sites cater to local sites but there are quite a few others which are specific to a particular need like the site that offers deals on garden needs, a particular community like Jewpon (targeting Jews in NY & other cities), or sites like Mamapedia targeting moms.
Well these days I came across the name from many of my South Asian friends and UTDallas folks “DesiSauda” and here is some of the analysis done on desi sauda:
DesiSauda came up with an idea to bargain deals from South Asian catered establishments. They bargain with the South Asian community and get the best deals for our customers. “Desi” typically refers to Diasporic, from the Greek word Diaspora, which means scattering, dispersion of people from ancestral homeland subcultures of South Asians. “Sauda” in Hindi refers to bargains. Combining these two words brings the essence of this organization – bring deals to you that matter the most.
DesiSauda is social buying site that offers deals from South Asian establishments targeted at South Asian and other communities. Once they establish the brand they start approaching other businesses that South Asian’s frequent. A South Asian is a person from one of these countries – India, Pakistan, Sri Lanka, Bangladesh, Nepal or Maldives. As per US Census Community Survey the number of South Asians in US is around 2.8M with 70% of this population between the ages of 17 to 64 years. South Asians are concentrated in certain cities around US – for example in the NY region (including PA, NJ & Connecticut) there are around 600,000 South Asians followed by Bay Area in California with the most South Asian population. Once established they would expand the operations to other countries where there is notable South Asian community – UK (4.2M), Canada (2.1M)
As it is pretty transparent that many deals portals are available in the market with the brand name such as Groupon, Living Social, FB deals Google deals etc. What can be the reason behind Desi Sauda to start as a niche and give a competition to Groupon and living social? Well Desi Sauda team should have definitely thought about it before starting the venture that even though after having companies who have million of subscribers already registered with them then why would the customers come to Desi Sauda and why the small businesses would give deal to them? Well you will find the competitions every where and its not about giving competition to Groupon and other companies. Desi Sauda came up with a different mind set keeping South Asians in mind. Being from South Asia, the CEO of the company thinks that you won’t get many South Asian deals available in market and that’s why we are here. Completed his MS and MBA from top schools in US, the founder of the company while doing this MS used to think twice before spending 15 bucks on a South Indian menu. Top of his mind used to say why I can’t get the food in 50% off so I can save some money and today is the day, when you go on their website you will find exciting deals from South Asian’s market which is keeping the customers really happy.
About DesiSauda Business Model:
With the growing market of South Asian’s in South West region we thought of getting the deals from South Asian market in Dallas. DesiSauda also thought of getting the deals from new business which don’t have existing connections in the market and thus help them introduce them to the local community. We work with the business to understand them, their customer profile and how they like to expand the business. We then create a campaign by working with the business that gives them the best bang for the buck, which includes the min and max number of deals they want to sell.
Each deal has a different tipping point. Once a deal is tipped, customer will receive an email with your coupon to print. The email will provide instructions about using the coupon. If the deal is not tipped then the customer gets the amount bank into their account.