Daily deal sites hold promise for smaller businesses because they help them gain access to a wider market and generate income through higher volumes at affordable prices. One in the latest website services available, daily sites like ‘Groupon’, Living Social, and local ones like ‘TryItLocal’, help small enterprises reach their target clientele that is searching on the internet for his or her specific products. These sites offer heavy discounts on selected products to lure a lot more customers. The promise of more business, getting noticed from the masses, higher profits, and wider market access pushes small businesses towards such sites. However, this approach to sales success is fraught with pitfalls, five of which are listed below:
1. A high amount of the sale price needs to be shared
Daily deal sites like ‘Groupon’ expect 50% with the final sale price as service charges. This is not a small amount and also the business only gets a lot that will barely cover its costs, with little scope left to make profits. The hype about making financial resources are not delivered.
2. Hefty discounts reduce the company image
A discount dilutes the emblem price of a product also it loses its appeal inside the customer’s eyes. Initially, there may be a spur in sales, but this will not be sustained since people’s perception is these products usually are not superior. Small businesses have to make a brand image, not see it slashed in their nascent stages.
3. Getting repeat customers is tougher
Signing up with an everyday deals site could be suicidal since customers may never return. The success of a tiny business lies rolling around in its ability to get repeat customers. This is because it’ll dilute the style with the product and cast doubts on its quality.
4. Serves deal hunters not relationship-oriented, brand loyal customers
The market today has two kinds of customers, one that is deal hunters without any loyalty or preference for specific brands. Such customers will always seek out the best selection and get the cheapest product. The second sort of customer will be the one that seeks quality, likes a reduction, but prefer to pay a little more for the better product, which if he likes, he will buy repeatedly. Such an industry is better to hook up to, build relationships with, and they are the ones who will sustain the small business.
5. Loss of price integrity
Price integrity is the term for a standardized price paying all customers. To make some direct customers pay a complete price, although some get a discount for a similar product almost at the same time from your different site, it is unfair. It casts any doubt about the small company and makes a certain list of customers unhappy, who may never return.
Daily deal sites may offer benefits to smaller businesses, nonetheless, they must be used selectively, perhaps to get a special range sold exclusively through them, so that the pitfalls listed above may be avoided, plus they may be utilized for better business prospects.
