Is Google About to “One-Up” Online Coupon Sites?

Tiffany Weimar - January 31, 2011

Online coupon sites have undoubtedly become a hot topic for 2011.  Groupon and Living Social have been the most popular sites to date, but are now being challenged by new start-ups and potential monster competitors alike.  On January 27th, it was reported that Google is creating a US-only daily deals service. This announcement (though details have yet to be disclosed–in true “Google fashion”) comes only a short time after Google’s failed acquisition of Groupon a month ago.  Will this turn into a new online rivalry between Groupon and Google or will Google’s new service differentiate itself and create an entirely new market?

“Google is communicating with small businesses to enlist their support and participation in a test of a pre-paid offers and vouchers program,” the Mountain View, CA-based company said in a statement. “This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with customers in new ways,” reports Direct Marketing News.  So what do this venture and other online daily deal services mean for you? 

For some companies, lack of human resources and infrastructure make it difficult to capitalize on such promotions.  Like Oprah’s “O-factor“, companies are often bombarded with new customers demanding a specific product after it has been introduced by companies like Groupon.  Without sufficient inventory or human capital to fulfill the orders, these promotions can actually backfire and have an adverse financial impact on business.  To understand whether or not to try using an online coupon company, access our January Newsletter article, “Deal of the Day Sites–Is Groupon Right for You?”, by our EVP, Danielle Leitch.  If you would like to tryout a promotion for your business, keep the following in mind:

• Promote a product that a substantial amount of people may want to purchase.
• You must have a cap on the amount of products you are willing to give away.  Otherwise, you will end up like Oregon’s Posies Cafe’ (they lost over $8,000 from a Groupon promotion).
• Brand exposure can be positively or negatively impacted depending on the deal outcome–proceed with caution.  If your company is able to successfully fulfill its promise, your brand can be strengthened.
• Think about your goal.  Many of your new customers may only end up being one-time buyers.  Is your goal in using a Groupon to gain new long-time loyal customers?  This may not be the best way to accomplish this.
• Be prepared.  Your website (if it’s an online deal), will have incredibly high traffic–I repeat, put a cap on the number of coupons you sell! If it works, you can be more ambitious the next time.

Online deal sites have proven successful for many companies.  Thinking through the process and proceeding with caution, however, is the best way to create an optimal brand and sales experience for your company.