With the success of the flash sales business model and the factors that contribute to their ongoing success, this has brought out a never-ending supply of companies who want to be the next leader in this fast-growing e-commerce segment. Other eRetailers were looking to experience the same success, but unsure how to enter the market. They knew consumers were spending their money quickly, so it wasn’t long before entrepreneur introduced a new e-commerce niche in the mix. This became known as the daily deal model where vendors partner with the site in order to showcase their sales and then the site takes a small percentage of the earnings. Customers that sign up may receive an email of discounted items or they can browse a website with a variety of deals to choose from, all with a relatively short timeframe for buying.
Groupon was one of the first daily deal sites attracting the business of retailers hoping to increase their sales by promoting brand awareness and marketing. Groupon would reach out to local and national businesses offering discounted products and services while earning a profit on the amount sold. Initially, the service was only offered in Chicago, where its headquarters are, but with success and high demand, they expanded quickly. After the first year, they were in over 50 states, had over 500,000 members and achieved a profit of over $30 million. Now in more than 50 countries and over 80 million subscribers, Groupon is known as the trailblazer of the daily deal industry. Today they have a handful of peers, including Living Social, competing for the same consumers while trying to offer a variety of products and services at better deals.
Flash sales and daily deals do have a similar theme; they offer products at a discounted price to the consumer, while being able to generate profit from the amount of goods sold. However, there are some key traits that daily deals have that differentiate them from flash sales:
No matter the platform, the goal of these flash sales and daily deals sites are to sell out. Whether they have a 24-hour shopping window or a week, both segments attract millions of consumers hoping to find the best deal possible. They serve a great purpose for retailers, to increase sales and promote their brand, while offering consumers bargain prices for their products. Based on the idea that a short-term sales event drives consumer interest, both of these business models are contributing to the e-commerce retail growth in today’s world.
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