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.