Also known as Daily Deal or Collective Buying sites, Group Buying Websites (GBW) are a relatively new phenomenon only hitting the mainstream in 2009. The principle behind them is to exploit the power of the web and social media to sell large quantities of an individual product or service at a discounted price that appeals to buyers, while still providing many benefits to seller.

Lots of GBWs have sprung up across the world, most notably Groupon and Living Social. Groupon seems to be testing the water in the Jersey, with an eternal "comng soon" promise on its Jersey page. However, the big players are still home grown, in the form of the godfather of Jersey daily deals, Quidsin and the young contender, Jersey Voucher.  While already hugely popular these websites are just 15 months and 3 months old respectively! 

How it works

You provide the GBW with a unique deal relating to a one of your products or services, the offer must give a minimum of 50% off the normal selling price. The deal is featured on the Group Buying website for a limited period of time, normally just 24 hours. On the featured day, your deal is promoted to the GBW's email subscriber list as well as Facebook and Twitter followers. Customers purchase the deal directly from the GBW using PayPal or a credit/debit card.  At the end of the process the customer prints off a paper voucher which they must present to you to redeem the offer.

When you deal has stopped showing on the website, the company will transfer all the revenue received from the deal to your bank account minus their commission which includes the charges for taking online payments.  Some GBWs will retain the revenue earned for a number of weeks before releasing it, others will only provide revenue on the vouchers that have actually been redeemed. 

Pros and Cons of featuring a deal with a Group Buying Site

  Dramatically increases your business's visibility
  No up front costs of featuring a deal
  Get lots of people in the door to whom you can cross sell and convert to return customers
  Lump sum cash injection
  A fair percentage of voucher holders will never redeem them!

  Attracts bargain hunters and deal seekers who may not return
  Deals can hurt your brand and make customers more price sensitive
  Deals might not be profitable for you in themselves

How to make the most of featuring a deal

Is it really for you?
Think carefully about the deal you are offering. What perception will it give to existing and potential new customers? Can you really afford to offer the deal?...do the maths carefully.  Do you have the infrastructure to manage the possible influx of new trade?

Think "Long Term"
The benefit of featuring a deal is not necessarily the income generated from the deal itself, but how you utilise the extra visibility that the deal will generate. I bought a pizza voucher and when the pizza was delivered there wasn't even a menu bundled with my food. What a missed opportunity!

Don't compromise on customer service!
While customers using vouchers didn't pay full price, this is no reason to provide them with substandard customer service.  In fact the opposite, you must work harder to convert them to full price customers of the future.  Also, Jersey being a small island, word of mouth is extremely important and you want these customers to recommend you to their friends and family. Remember users of GBWs are much more likely to be vocal on Facebook and Twitter than your normal customer.

Cross sell or  up sell
Can you increase revenue by offering upgrades to voucher customers or cross sell complimentary products to them.

Boost out of season sales or move stock quickly
If your business is seasonal, then you can utilise a deal to boost sales during down times. Alternatively, if you need to move stock fast then a deal could be the easy solution. Make sure you think carefully about the voucher terms especially the dates for which they are valid.

Which Group Buying website to use?

While Quidsin is now a bit of Jersey institution, Jersey Voucher is fast making it's mark and has already put a stop to the monopoly. A side from some strewd marketing tactics, like it's iPad giveaway, free vouchers on a Friday and Share and Earn policy to encourage the introduction of friends, the main reason for it's rapid growth is the lower commission it charges it's business customers.  Currently Jersey Voucher charge half the commission of Quidsin to feature as the main deal.  As well as this they also release the cash to the business faster.  This makes both featuring a deal more attractive for businesses and enables better deals for the consumer.

Quidsin (at the time of writing) certainly have a larger number of email subscribers and Facebook followers, which ultimately means more exposure and more deals being sold. However, Jersey Voucher's rapid growth continues with it adding around 25 new Facebook subscribers each day. By mid 2012 these companies could well be on a level playing field in terms of their coverage on the island.  

What's your take?

Not sure whether to take the plunge?  Had any experiences you'd like to share of using QuidsIn or Jersey Voucher? Please share your thoughts and experiences in the comments below.