Groupon USA launches "Create Your Own Deals" for Businesses
Over in the USA, Groupon has launched self service deals for small businesses. Dubbed the Groupon "Deal Builder", small businesses can create their own offer using the online tool, at prices that suit their margins.
This new offering is completely different from the way Groupon normally operates. Traditionally Groupon sales staff will reach out to local businesses and sign them up to offer a deal. The structure of the deal is created alongside the business owner.
You might think most deals are just dreamed up, but the top deals site look at their previous data and each deal is carefully planned to make it a success. Groupon staff have all the data from previous deals and know how successful the deal is likely to be, based on price and the value of the deal.
The issue with the new "create your own deals" is the tendency for businesses is to only give a small discount on their deals to protect their margins. Their deals are likely to be less exciting for customers due to higher prices. When the deal isn't structured personally by a Groupon staff member, small businesses won't have access to expert knowledge and data on how well previous deals have sold in their area.
Groupon is notorious for driving a hard bargain with businesses to offer the lowest price possible on each deal. Without a Groupon staff member pushing for a lower price, the deals won't be as good for customers. The argument businesses have with the current way deals are created is that the customers win and get an amazing deal, but the business often makes very little on the deal.
A typical deal may only just cover the cost of providing it, allowing close to no profit when offering a daily deal. When Groupon staff are taken out of the deal designing process, the deals are likely to be higher priced, and not as attractive to customers. Hence deals will sell less, meaning less customers for both the business and Groupon.
The Deal Builder will provide pricing ideas and guidance around terms of deals that are successful. But business owners will have the final say over the deal. Deals will be double checked by staff and go live a week later. I think small businesses will like that they have more control with the Deal Builder. This could also see businesses going back to give Groupon another go after being put off in the past at the types of deals they were asked to offer.
Deal Builder should provide a massive lift in the total number of deals that Groupon displays in it's local searches. Gone are the days of one deal per day. Nowadays deal sites are shifting to offering long term deals available for weeks or months.
Groupon is aiming to be a search engine for deals. Whenever a customer wants to go to dinner for instance, they can go to Groupon, select their city and see dozens of deals available for purchase right then and there. They can also refine their search to display say, just Indian restaurants in their area.
So why is Groupon allowing deals that they know won't be as good for customers? The more deals Groupon has in their database, the more useful Groupon will become when you are looking to get a deal on almost anything imaginable. Groupon wants you to think of Groupon whenever you want a deal, not only when they email you.
Groupon also have their normal way of doing deals, getting very low prices when their sales staff help design their thousands of deals currently live. So they will still have their staff designed deals. These "create your own deals" will really just be icing on the cake and fill out their deal search results.
Interestingly, several New Zealand deal start-ups have attempted to offer create-your-own-deals in the past. The concept hasn't worked with sites like BizBuz.co.nz and BizDeal.co.nz closing down a couple of years ago. But if anyone can make this concept work, it's Groupon who are the world leader in daily deals.
No word yet on whether Groupon NZ will offer Deal Builder in New Zealand. The fact that the service has been rolled out nationally in the USA means it is likely a new initiative that is here to stay. However Groupon NZ doesn't yet even have the search bar yet, so it may be a while until Deal Builder is available in NZ.
Posted: Wed 26 Feb 2014