How Group Buying Websites (Daily Deals) works 2 ?

In the last post I presented some information about Group Buying ( Daily Deals ) websites like:

Group Buying websites (Daily Deals) definition and How does Group Buying ( Daily Deals ) websites really works, In this post I'll talk about the businesses that are better suited for group based promotions, a nice Buying websites (Daily Deals) revenue Calculator and present a Group Buying ( Daily Deals ) infographic from lab42.

let's start with what types of businesses that are best suited for Group Buying ( Daily Deals ) promotions?

The most common Daily Deals vouchers are about :
-Dining spots, such as restaurants, cafés, coffee shops, and other similar businesses.

-Spa , Hotels , Arts & crafts , fitness , Parts and Accessories. 

The calculations of Group Buying ( Daily Deals ) revenue is easy if the local merchant keeps a good track of his costumers, this link includes a very nice Daily Deal revenue calculator, the calculator highlights some important elements the local merchant should consider it while evaluating is Daily Deals a profitable rewarding way of advertising for his business or not.

Example of the important elements : 

- Voucher actual value.

- Voucher price.

- Voucher sales expected.

- No. of Redeemed before voucher expiration date is reached.

- Sales with additional purchases.

- Average additional purchase amount (beyond voucher value).

- No. of Redeemers that become regular customers.

- Your revenue per voucher sale.

- Daily Deals website share per voucher sale.

The sheet includes some important elements & will help the local merchants a lot in considering all related factors while calculating their revenue from Daily Deals promotions.

Also the Lab42 "What's the deal with Daily Deals?" Infographic highlights some statistics for the local merchants to take into consideration before deciding whether to use Daily Deals website to promote his business or not , Lab42 asked of 500 daily deals users ( in USA ), determining which sites they use the most, how diligent they are at checking for new deals, and how much money they’re spending on them and found the following:

1- Most purchased vouchers are for Restaurants, comes next Spa & Hotles vouchers. 

2- 82% have returned to a business (at least one time) after purchasing their deal.

3- 61 % have let a deal expire before redeeming.

Lab42 says there are more than 660 deals sites online today, The most well known is Groupon, with 115 million subscribers, but saw a 50% dip in its web traffic since July, 2011, according to Hitwise, this dip will raise an important question, is Group Buying ( Daily Deals ) websites here to stay or soon will drop one after one out of the market ?

The Facebook leaves Daily Deals market news was chocking as it's just entered the market, Facebook started making offers in five cities starting in last April, including San Francisco, Atlanta and Dallas, and had a small sales team arranging deals with local merchants. But the company also ran offers that were set up by 11 other daily deal companies, including ReachLocal, GiltCity, HomeRun.com, PopSugarCity and Zozi.

“After testing for four months, we’ve decided to end our Deals product in the coming weeks, We’ve learned a lot from our test and we’ll continue to evaluate how to best serve local businesses.” said Annie Ta, a spokeswoman for Facebook in California.

Facebook’s exit means Groupon has one less major competitor as it prepares for a $750 million initial public offering later this year.

The Deals project was introduced because the daily discount market has been predicted to bring in $3.93 billion in 2015 – a huge leap from $873 million last year.

“It is surprising that Facebook ended their deals product after just four months,” said Vinicius Vacanti, co-founder of Yipit.com, which aggregates daily deals and tracks the industry. “On the other hand, Facebook Deals had been an underwhelming product and experience.”

Facebook’s decision not to pursue the business may mean the company thinks the approach lacks merit.

“The Groupon group buying phenomenon is a commodity. There are no barriers to entry. It’s just not going to work because everybody offers it and therefore the margins go down,” said Jeremiah Owyang, a partner at research firm Altimeter Group.

But Facbook leaving the market & Groupon 50% dip in its web traffic aren't quite perfect indicators to determine wether the Group buying websites ( Daily Deals ) will end soon or will see a growth as it is still new market and it's hard to predict what is going to happened.
At last you can check  Agrawals blog as its a great source of evaluating the Daily Deals Market provided by my friend Ahmed Tarek Elasra 

Resources :

- lab42
- arabian gazette
- CNN
-Hitwise
- Tomuse