Everyone loves a good deal or a discount. If you haven’t already discovered sites like Zappon, Groupon, What-a-Deal, UbuntuDeal, Wicount or Twangoo (and there are more), you’re missing out on some savings. You do need a credit card — though apparently bank transfer and electronic transfer option will be available soon.
This makes a great gift option, even if you’re not going to purchase for yourself, so don’t dismiss it with a “why would I want to buy stuff I don’t need” approach. It’s true that you might be tempted to purchase something you don’t really need, so if you’re easily tempted, simply don’t sign up.
How does a site like this work? Choose a site that catches your fancy (or all of them), as each site negotiates discounts on a whole lot of goods, services and events in your city and you can find out about them by subscribing to the site’s newsletter, free of charge. This newsletter will reveal the “deal of the day”.
When you join the site, you can also indicate your preferences — if you check the “spa services, massages and skin care” box, but not the “cars and bikes” box, you’ll be alerted to discounts relating to the former only.
The deals are only activated when a minimum number of people agree to buy, so it pays to tell your friends, relatives and so on about them — if enough people “buy”, then the deal’s on. Reserve the deal by clicking the “buy now” button on the site and entering your credit card details (just be sure the site is secure — each site should have information confirming this, together with a little padlock icon on your browser).
When enough people sign up, the deal “tips” and your credit card will be charged for the deal. When payment is complete, you’ll receive the voucher via email. You must print it out to redeem it.
Smart Money tried Zappon’s “deal of the day” — R200 worth of Exclusive Books online vouchers for R50. The saving is, quite obviously, R150 (and let’s face it, that’s a great deal for book lovers).
Signing up was easy and once I’d entered my credit card details I was invited to “share the love” and share the deal with friends on Facebook and Twitter — a very clever marketing ploy, but also necessary, because if too few people sign up the deal is off. I was then mailed a voucher to use in the event that enough people opt to buy the deal. With just over 30 hours remaining and only 50 zappon left, it looks like a shoe-in—
According to Arthur Goldstuck, managing director of World Wide Worx, competition in this sector has become really intense during the past six months or so.
“Much of the competition has been driven by the sell-to-Groupon strategy, which was like watching the action in a casino, with Twangoo winning the jackpot. Right now, there’s some brand confusion, with Groupon launching MyCityDeal in South Africa, in preference to a Groupon or Twangoo site, but that will become a non-issue after a while,” he says.
“Wicount and CollectiveCow seem to be doing well, Zappon will do well, and numerous others are joining the fray, from What-a-Deal to Groubo to UbuntuDeal. Many will fade away. GroupBuying.co.za closed before it even opened. Fans of this kind of buying are likely to settle on a few market leaders, leaving the rest to shut down or be acquired.”
Goldstuck says the main challenge for the sites is providing variety. If they do, they’ll find it easier to maintain loyalty.
“There are only so many spa-massage-pampering deals (a staple of the early market leaders, MyCityDeal, Wicount and CollectiveCow) you can offer before people lose interest,” he says. “Offering deals that can be beaten on normal online retail sites — like three DVDs for R320 — will also not thrill online shoppers.”
Interestingly, some retailers in the United States have been pulling out of sites because the idea has worked a bit too well and they find they’re giving away too many things for free. The idea is to promote a company — a bit like online marketing — but if customers don’t return, or are only keen on freebies, the retailer may lose.
Does it help to offer 70% off a cappuccino, for example, if half the people don’t use the voucher (so customers don’t visit the store, anyway) and the other opt for a cappuccino to go without ordering a muffin or breakfast at the same time, when they’re in the shop? How does the retailer score?
It will be interesting to see how this plays out in South Africa, and whether retailers will be in it for the long haul.
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