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How does group deal web site damage your business? Part 2

The deals web sites ripped off the business owners. This doesn’t really cause any damage to your business. The real damage to your business is the reputation.

Why? A service or a product was normally selling at $40, but now a customer and use $20 to buy it. Let’s think this from a customer’s prospective…… This is a ripped off, it is now selling at $20 and I believe the company is still profitable but this was selling that at $40. Customer will not come to buy that service/product for the original price again.

This may not cause major impact to businesses that sell products, but it definitely cause damage to businesses that sell service.

People who bought the deal will go to your shop to get the service that they paid for (at a 50% discount price). Will they come again? As far as what I have got told from my friends.. NOPE. Those customers who bought deals will not come back again.

Most of the people who bought deals from those deals web site are “DEAL Hunters”. They hunt for cheap deals and get cheap service. When your service is not selling at discount price, they will not come.

So if your intention is to draw more customers from those daily deals web site, don’t bother to try them. As you will not get any promotion effect out of it. To run a business, you want return customers, you don’t want someone just come once because your price is cheap and never come again.

As a conclusion, daily deals will not help your business, but make you to do something for nothing, sometimes, you even spend money for nothing. You may consider a proper advertisement to advertise your business instead of running deals.

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How does group deal web site damage your business? Part 1

Business Owners who want to promote their business by offering some discount deal to attract more customers. Most of them will use the popular group deals web sites, for example : groupgo.com.au, groupon.com.au, scoopon.com.au, livingsocial.com.au, deals.com.au, Spreets.com.au, etc.

There are thousands of daily deals web sites nowadays, however, NONE of them will help your business. Why I would make a comment like this??

I have friends who run different sort of businesses around Sydney and engaged the above group deals web sites to promote their businesses. The business types include beauty salons, nail make up, hair salons, restaurants, products, etc.

Your business need to qualify to be advertised on their platforms, most of them request you to provide AT LEAST 50% discount. Secondly, your business need to be interested to their audients. If the number of purchase is less than 100 in the first hour after they listed the deals, your deal will be cancelled. Thirdly, the deals web site often ask for commission up to 50% of the deal.

Let us do a calculation here. If you have a service or product which normally sells for $40, when you list this on those deals web sites, you have to sell it at $20 and up to $10 need to pay as a commission to the web site owner. As a result, a normal $40 service, you only get $10 back. In a normal business operation, business owner will mark up the price for a profit, now you have to ask yourself, in my example can $10 cover your cost for a $40 service/product.

In other words, there is a chance for each deal purchase, you are losing money. The winner will be the web site owners because they do nothing but just sitting there making money from their referrals.

I still haven’t answered my own question how does that damage your business…. Will be continue in Part 2.

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