Group buying sites are everywhere today. Groupon. WagJag. Steal the Deal. Heck, I even subscribe to one, just to be curious about who is taking advantage. In the rural community where I live, the answer is almost no stores are using them. That’s not surprising.
Why are group buying sites not ideal for rural communities?
- Volume of traffic coming through your door via the ‘daily deal’ will likely be low. Very low. That means rural stores will almost certainly take a loss by the time the discount loss and margin to the deal operator site are factored in.
- By sheer population size in rural areas, you will not generate the deal ‘hype’ that retailers in large urban areas will achieve.
- You may end up simply giving your loyal customers a deeply discounted deal. OK, what’s wrong that? Well, you don’t need a daily deal site to act as the middleman for that purpose. That ends up being an even more expensive promotion on your end.
- Proponents of daily deal sites will tout all the ‘no-brainer’ benefits of social media buzz and word-of-mouth promotion. Duh. Social media, especially, is a tool you should be leveraging on your own. And guess what? It’s FREE.
- What are your chances for repeat customers after a deal? For example, a paddleboard shop offered a daily deal at 50% off the cost of a rental. It was still very expensive. You can almost bet that anyone who grabbed that particular deal will NOT pay full price on another given day after the deal expires.
- Most importantly, many rural retailers operate on thin profit margins. Deep discounting is usually not the answer when you’re watching the bottomline.
Speaking of bottomline, before you jump into a daily deal site, rural businesses would be far better to explore innovative marketing ideas that promote customer service and value. Don’t ever buy into the group buying site pitch that value always means 50% to 80% off.