From beauty therapists to cheesemongers, all kinds of businesses are offering coupons, vouchers and cash-back deals - and there is a slew of new websites offering consumers easy access to these thrifty deals, writes CONOR POPE
IT TAKES GUTS to say no to Google, particularly when it comes to the negotiation table with a suitcase stuffed with six billion dollars. That is, however, exactly what a two-year-old Chicago-based company did six weeks ago.
What type of business, do you think, is this upstart who turned its nose up at such riches? Coupons. While they may sound as glamorous as a Saturday night in, watching Brendan O’Connor on the telly, coupons are suddenly sexy and at the frontline of an e-commerce revolution which has seen savvy consumers making savings on everything from weekend breaks to teeth whitening to satellite subscriptions.
The big player in the market – and the one which had the confidence to say no to Google – is Groupon, which also trades under the City Deals banner. It is the fastest growing company in the world and is thought to be preparing to launch on the US stock market later this year.
Its business model is so simple you may punch yourself for not having thought of it yourself. It sends people who register for its service daily messages via e-mail, Facebook or Twitter offering discounts on many thousands of products and services. Businesses want to get involved because, thanks mainly to the reach of social networks, it drives customers their way.
Groupon keeps a percentage of every deal sold – as much as 50 per cent. In just seven months to the end of last year, it doubled the number of markets it serves and now has over 33 million subscribers in 35 countries. Its sales were around $500 million.
Last week, on the Dublin section of the City Deal site (citydeal.ie), you could buy five laser hair removal sessions for €120 down from €299. If you wanted hair to go the other way you could spend €1,349 on some “follicular unit transplantation” which normally cost €3,400. Other, perhaps more attractive, deals included a €16 pizza for €5 and a “romantic getaway” for two in the Fitzwilton Hotel, plus a bottle of wine on arrival and a full Irish breakfast and a massage for €99. There were also daily deals going in Cork, Galway and other parts of the country.
It is not the only player in the Irish market. LivingSocial (livingsocial.com) is also in the space offering cheap deals. It started out 16 months ago using seed capital from Steve Case, founder of AOL.
Bikram yoga, so beloved of celebs, is not cheap but it is increasingly popular and otherwise sane people spend as much as €18 on a single 90 minute class, dripping sweat and contorting themselves into 26 different postures in a room heated to 41 degrees.
A month-long, all-you-can-sweat, pass to the bikram centre in Dublin’s Fairview normally retails for €180 but at the end of last month, a pass was available on LivingSocial for just €39, a discount of €141. And there was no catch. The centre was heaving with newbies brandishing the vouchers last week and many will keep coming to this nice centre, run by nice people, because, as they will discover, the yoga may be tough but it will make them feel good.
Each LivingSocial deal is active for 24 hours and subscribers typically have up to 12 months to redeem it. People who convince three friends to buy a deal get theirs for free. Its most successful Dublin deals so far are BodyTimeTherapies 60-minute deep-tissue or hot stone massage for €30, a discount of 60 per cent, and a €20 voucher from Sheridan’s Cheesmongers for a tenner – it sold 668 of these.
Kevin Sheridan says he was contacted “out of the blue” by LivingSocial and asked if he wanted to get involved. He is already fairly active in the social network sphere – he has 2,500 Facebook fans – so he was open to the idea.
The vouchers cost people €10, of which LivingSocial took €3 so Sheridan was committing to sell €20 of stock for €7.
“The big thing was to get people through the door. Unlike normal advertising we were only paying for the customers we were getting so as far as targeted advertising goes it was a good way to do it,” he says. “And the chances are that if they came in with the €20 voucher they would spend a bit more,” he adds.
He says it was successful in terms of how many customers they reached but points out one downside – a lot of the vouchers were sold to his existing customers so not as much new business was generated as he had hoped.
“The other benefit was that LivingSocial paid quite fast and there will always be a percentage of the people who bought the vouchers who do not redeem them,” he says.
He is currently waiting to see what that percentage is before having another go as, unlike many companies who sign up offering cosmetic treatments, the margins in a cheesemongers are tight so if there is a huge redemption, it could end up costing him a lot of money. “From a customer’s perspective it is great, mind you – you’re getting your stuff at half price.”
“It is a very powerful model because we can take advantage of the social networks to spread the news of deals via word of mouth,” says Peter Briffett, LivingSocial’s managing director for Britain and Ireland.
He told Pricewatch that it was the “future of local advertising”. He says the company plans to “hyperlocalise” deals, “so people can be offered things which are in their neighbourhood or on their street with big discounts. The response has been fantastic and has been very well received in Dublin. We have saved thousands of Irish people millions of euro already,” he claims.
In the US it has recently launched an “escape platform” where people can book cheap weekends away, and a family edition to cater for the cheap deal needs of families. Briffett says the company plans to replicate those models here.
There are other sites offering slightly different deals which may appeal to smart shoppers.
One which is becoming increasingly popular is fatcheese.ie, a free site which incentivises people to spend money. Unlike a Groupon or LivingSocial system, it promises people money back. The way it works is simple. You shop at any one of 800 online retailers via its portal and you can get up to 30 per cent or a fixed amount, up to a maximum of €120 back in cash.
Last week, anyone who bought an O2 Free SIM card was given €5 cash, while there was a 4 per cent cash-back offer on Debenhams purchases. Anyone who signed up for a Sky TV subscription through the site could have earned €100 in cold hard cash.
You can even make savings on the savings you’re making via City Deals. It too has a presence on the Fat Cheese site, so if you buy a city deal, via the portal, it gets a 10 per cent commission which it passes back to you.
The site was launched in Ireland in December 2009 and according to its founder Maya Kamourieh, when consumers get over their skepticism that there is no such thing as something for nothing, “there is no looking back”.
“When we say cash-back, it is exactly what we mean. You buy what you want via our site, often at a reduced price anyway, and then you get your bonus on top. No catches.”
It almost sounds too good to be true.
