Info on deal websites needed

Cucullan

Can someone tell me how much websites like dealrush.ie and grabone.ie etc cost to run a deal? Do they charge per item or a set fee, and what else is required? Any help would be grateful.

Gloomtastic!

As far as I know, they charge up to 50% of the per item deal + VAT. Some of them pass on the fee to the retailer as soon as the voucher is bought, others wait until the voucher is redeemed ie if the buyer doesn't use the voucher then the retailer gets nothing.

jimmii

As Gloomtastic says they do vary it works out pretty expensive to run the deals and you only really turn a profit if the voucher isn't used (and its one of the companies who still send the money) its a good bit of marketing for a start up but you need to be running pretty big margins for it to be something to do long term.

We used grabone one time and their service was pretty good I think it 25% they sent our cut a week after the offer closed so you get the money before most people have redeemed the vouchers.

One thing to keep in mind is how flexible you are going to be we were getting people coming in asking to use vouchers a few months after they expired lots of people will be generous with the one voucher per person rule too.

My experience with these companies and even the most familiar ones is they flat out lie about the real price of the product to the consumer and claim discounts that are in no way accurate.
That aside the actual mechanics of their deals usually means your cutting your margin in half at least to sell through them. And they negotiate very hard make it less then that. Their first offer to you is often less then the manufacturing cost and you have to negotiate upwards. They also sell a lot less for you then you expect. This can have a negative effect on the brand depending on what your selling.

So Im not very positive towards them at all. However there is the positive side of exposure for your business or product, so if thats the important thing and not profits from the actual deals, then it can be a good idea to use them.

Trojan

If you can break even (truly covering ALL of your costs including opportunity cost) then the deals can make sense as you're reaching new customers that you probably wouldn't have otherwise. If you can't cover your costs, or all you're doing is selling discounted to existing customers, then it doesn't make a lot of sense.

As for reach, I suspect the deal site mailing list reach is significantly lower in mid-2014 than it was back in the heights of 2009-2010.

delahuntv

Gloomtastic! wrote: »

As far as I know, they charge up to 50% of the per item deal + VAT. Some of them pass on the fee to the retailer as soon as the voucher is bought, others wait until the voucher is redeemed ie if the buyer doesn't use the voucher then the retailer gets nothing.

At the very beginning some charged 50%, but as with any advertising product, the rate card is a piece of fiction.

Like anything, they will look at how much they will likely earn from the deal. If its a potential very popular deal at say €50, you'll get them down to 15% or even less.

If its a €5 deal and they don't expect a huge number of sales, expect to pay 30%. All fees are + vat on their cut. Also factor in that their fee is on your vat inclusive price, so 15% is in reality about 18.5% of your net price if you item is a 23% vat item.


The day of giving a false RRP or false value is mostly gone, but so are the "70% off" headlines.

delahuntv

delahuntv wrote: »

The day of giving a false RRP or false value is mostly gone, but so are the "70% off" headlines.

Ive had the two biggest companies in the UK recently send me proposals for a product with an RRP that is way over what it will be normally and claiming a 60% discount to the customer. So its very much alive!

jimmii

The false RRPs days definitely aren't gone I've seen things that we stock being offered at huge discounts and still being more than we charge normally.

cgriffin

It really does depend who you go with in general.
The bigger ones groupon etc generally expect you to discount on rrp by at least 50% and also want a 50% margin. The smaller ones can be more competitive but won't have as big an audience reach.
In very very simple terms if you normally get 100 euro (all in) for whatever you sell the breakdown will be as follows
customer pays 50 Euro
Groupon gets 25 Euro
You get 25 Euro
Not sure who takes the hit on merchant fees I think each deal site have their own way of dealing with it.
The only company that ever told me it was definitely worth doing were one that called to homes to clean ovens. Whilst they lost a fortunate on the initial offer they did get quite a lot of regular repeat business from customers acquired on the initial deal.
Personally I would advise the vast majority of businesses to avoid it.

Buttercake

I don't know why anyone would want to waste their time getting into deals websites

J.Ryan

Buttercake wrote: »

I don't know why anyone would want to waste their time getting into deals websites

If you can up-sale when you get the customer in the door. A good example of this is restaurants selling drinks with low price 2 course meals or hotels selling meals and drinks to 2 nights B & B offers.

jimmii

Buttercake wrote: »

I don't know why anyone would want to waste their time getting into deals websites

You can make a profit from them and you can get good exposure.

terryhobdell

I know a hairdresser who established their business with a deal costing half normal price for a service normally costing around €50 per time. 10 visits for €250 she established a business kept a percentage of clients. She reckons it made her.It horses for courses if you can build from it do it if not don't

cgriffin

terryhobdell wrote: »

I know a hairdresser who established their business with a deal costing half normal price for a service normally costing around €50 per time. 10 visits for €250 she established a business kept a percentage of clients. She reckons it made her.It horses for courses if you can build from it do it if not don't

The problem with this is that if she doing this through a deal site she would have ended up receiving closer to 10 euro per service than the 25 euro outlined above or the normal 50 euro.

Atomico

terryhobdell wrote: »

I know a hairdresser who established their business with a deal costing half normal price for a service normally costing around €50 per time. 10 visits for €250 she established a business kept a percentage of clients. She reckons it made her.It horses for courses if you can build from it do it if not don't

cgriffin wrote: »

The problem with this is that if she doing this through a deal site she would have ended up receiving closer to 10 euro per service than the 25 euro outlined above or the normal 50 euro.

I think the point is that even though you take a hit (which in fairness is also generally temporary and for that deal only), the return has the potential to be infinitely more than the extra few quid you would have otherwise made.

In this case this hairdresser established her entire business off the back of Groupon! I can see how it could work particularly well for these type of businesses, where repeat custom is key.

cgriffin

Atomico wrote: »

I think the point is that even though you take a hit (which in fairness is also generally temporary and for that deal only), the return has the potential to be infinitely more than the extra few quid you would have otherwise made.

In this case this hairdresser established her entire business off the back of Groupon! I can see how it could work particularly well for these type of businesses, where repeat custom is key.

I think there was a boards deal section a one point but they abandoned it. This should have raised alarm bells for everyone. If a company perhaps with the largest cross-site traffic in Ireland decide to pull out of the deals game you got to wonder why.

Was it that they couldn't make a go of it (unlikely)

Was it that they didn't think it was a sustainable long term business? (probably a factor)

Was there too much hassle with customers that didn't feel they got what they paid for as the company offering the deal couldn't cope with demand?(probably a factor)

Was there very little repeat business from customers? (probably a factor)

The problem is at its peak the deals companies showed zero loyalty to customers.

Hairdresser A had a deal with them last week and Hairdresser B on the same street runs the same offer with them this week.

A large percentage of customers will go for best price no matter what. Indeed many would go without the service completely only for the great price they are getting through this offer.

Then you have the added hassle of over selling deals and not being able to cope with what they sell which can be very damaging in itself.

If you can sell 500 deals in a week and get 25 euro and 50% of those that take it come back and spend 100 Euro a week thereafter that is superb but I suspect for the majority of businesses that go with a deals site don't get anything like this.

Glad to see some of you on here seem to be able to use these services successfully and the very best of luck to anyone that can.

Personally it is not a route to market I could recommend though.

zAbbo

cgriffin wrote: »

I think there was a boards deal section a one point but they abandoned it. This should have raised alarm bells for everyone. If a company perhaps with the largest cross-site traffic in Ireland decide to pull out of the deals game you got to wonder why.

Was it that they couldn't make a go of it (unlikely)

Pretty much that. E-commerce is not a strength of Distilled Media.

Speaking from experience, Deal companies will generally require a discount of 50% and seek anywhere from 10% to 50% commission based on a type of business and industry.

Commissions range, as do payment terms, VAT - there are many factors.

Arm yourself with some information and speak to each company to evaluate what they offer. Companies who treat it as customer acquisition perform best, and prepare themselves correctly for the influx of new customers.