Blog posts tagged LivingSocial

The price is right on social buying sites

In today’s cash-strapped times, we are all looking for a bargain. But where does this leave the small business?

There are so many ways that shoppers can find the best price. There are price comparison websites, online voucher sites and even apps that allow you to scan barcodes and compare prices elsewhere.

Price-cutting is rife and big businesses are at it all the time. Some retailers are running almost continuous sales in a bid to bring in more business. Meanwhile, the supermarkets can afford to offer highly competitive prices on loss leaders just to get shoppers into their stores.

These kinds of practices don’t always work for small firms whose margins are already tight enough and who can’t afford to be constantly discounting. But the fact is that many consumers now expect some kind of special offer before they are prepared to open their wallets.

And so the arrival of social buying sites like GroupOn, BuyWithMe, TownHog and LivingSocial could well be very good news for small firms with a local customer base — as well as being good for canny shoppers.

The social buying sites all work slightly differently but essentially they allow businesses to promote a specific offer to subscribers in their local area offering tempting discounts with extra money off when groups of three or four buy together.

Sites like GroupOn send out emails to their subscribers with a daily offer. Subscribers respond, they get a voucher for the product or service and the business gets the revenue after the social buying site has taken its cut. So businesses only pay when they sell something.

Yes, businesses advertising on the sites have to offer a discount. But it’s a targeted offer to an audience of interested subscribers. It’s not constant price-cutting. It’s much more strategic and measureable than that.

But does it work? One upmarket restaurant in Bristol — Bells Diner — sold an impressive 413 meals for two via LivingSocial when it offered a 52 per cent discount on an eight-course meal in November 2010. Now that’s an attractive offer, for sure. But that’s 826 additional customers that have come through the door — and they could well be back for more.

 

 Rachel Miller, editor, Marketing Donut.