Daily deals surge set to lure start-ups online: analyst

A third of daily deals customers are new to the brand they purchase from, new figures suggest, with a leading analyst predicting the surge in group buying will push more start-ups into launching their own websites.

In a survey of 22,000 online shoppers in the US, research firm ForeSee Results found 31% were new to the product or service they purchased via a daily deal coupon.

A further 38% were existing customers, with 27% infrequent customers. The split suggests that group buying, where a business’ product is offered on a discounted basis if enough customers sign up for it, can help small businesses attract new customers, although significant cannibalisation of existing customers also takes place.

The research also found that two-thirds of people who visit the top 100 retail websites in the US are signed up to at least one daily deal email scheme, with 46% subscribed to more than one service.

A further two-thirds of subscribers have purchased a deal in the last 90 days, with 55% using them more than once in the past 90 days. The gender split of those using group buying is slightly tilted towards women, at 59%.

Sam Yip, senior research manager at Telsyte, says the results are generally encouraging for Australian small businesses.

“We are about 18 months behind what happens in the US market, so I’d expect a similar thing to happen here, given time,” he says. “In Australia, no one is loyal to a website ­– they are loyal to the deal,” he says.

“I think we can expect further aggregation of deals in Australia, which will relieve deal fatigue. There are so many deals sent out at the moment that any change will, I think, drive uptake.”

Yips adds that group buying could convince many small businesses to go online in the first place.

“There are many small businesses that still don’t have websites and I think group buying will encourage them to get online,” he says. “This is becoming a key channel in order to reach customers and the major deals sites encourage start-ups to think a bit more carefully about their online strategy.

“The question is, do you see it as a sales channel or a marketing channel? If it’s marketing, you need to look at what you can achieve with group buying and whether it is giving you better brand awareness.

“There’s also the opportunity to cross-sell and upsell, clear stocks and act as a complementary form of marketing to other types of advertising. Plus, it’s measurable, so you can see the margin you’ll make on deals.”