Bargained to Irrelevance

It seems every startup wants to be the next Woot, Groupon or Gilt. For those who are confused these sites (and god knows how many more) provide heavily discounted brand name products usually on a time restricted basis i.e. one per day. Groupon is well known for providing 60%+ off local entertainment and dining whereas Gilt focuses on providing heavily discounted designer clothes once per day.

The Marketers love it

Every interview I hear talks about how these websites hit two major targets: – They reduce risk of a customers first purchase and induce trial; and – Previously out of reach products reach new demographics.

On the surface it makes sense. If something is nearly free I am likely to try it. I can’t afford to regularly buy high street clothing but, at 80% off it is now in my range. Sales are skyrocketing for manufacturers, designers and local retailers. Everybody is keen to jump on board and bargaining sites are popping up everywhere.

Where did common sense go?

I don’t doubt that as a local retailer bringing in hundreds of new customers gives me a chance to try out new deals. My problem is with the volume of deals available and the demographic who generally follow them. I can now find nearly anything for free. Those far my senior are using Groupon and Gilt with no effort. A large portion of those who use deal sites are professional deal hunters, that’s all they do.

As a marketer the first rule is to figure out who I want to target and reach them. Deal sites are getting so bloated that bar geographic location no further targeting is available. More importantly, let’s address the two key benefits:

They reduce risk of a customers first purchase and induce trial Yes, they do. But filling my store with hundreds of irrelevant people is useless. Likewise for those professional bargain hunters, my chances of re-selling them are low.

Previously out of reach products reach new demographics Way to kill the brand image. You look cheap. I can understand brands with ageing demographics need to swap over but there are better ways. You are becoming the cheap brand. If i’m a bargain hunter, I know that if a brand hits me up once I can probably get their merchandise a second time, and a third time at a discounted rate too. Now when I want to feel rich and powerful I go for brands that I know are not found heavily discounted online; I want the prestige of wasting my hard earned cash.

This does not mean bargain sites are bad

Curveball eh? I have applied bargain sites well to several of my customers brands to induce trial but you know what? We heavily researched and knew that the demographics we were hitting were exactly who we wanted and needed. Those demographics were very specific and don’t apply to everybody.

I simply don’t see bargain sites fitting every industry and every brand regardless as to whether it is last seasons stock. The bargain site bubble is looming, there are simply too many bargains and too many idiots cheapening their brands and giving away things near-free for no return.