The social couponing or daily deal sites work by emailing discounts daily to their subscribers and taking a cut of the resulting earnings. The technology behind them is far from ground breaking: Anybody with an email program may start a company. The key on their success is the sales agent that can influence local businesses to give a one-time deal to thousands of consumers through the web. Top three sites are Groupon, LivingSocial and KGB Deals.
Daily deal sites are succeeding for now. Consumer research firm eMarketer said such growth is one aspect encouraging development in e-commerce revenue, which is certainly anticipated to attain $188 billion in the US this year. Forrester analyst said online retail sales would reach $278.9 billion by 2015, contributed to by new company models including flash sale and regular deal sites.
Smaller sites are differentiating themselves by giving niche deals for specific market just to compete with Groupon & Living Social. For example, Gilt Groupe, which began as a luxury apparel discount site, last year set up Gilt City with 22 salespeople in six cities to offer discounts on higher end luxury goods and services. PlumDistrict is another daily deal sites with a niche: selling deals aimed at mothers. LivingSocial’s general manager said that the industry is far from saturation since there are a lot more innovations to bring into the market. There is room in the market for competitors. But for us, there is only one large competitor, Groupon and a number of smaller ones.” Such sites ultimately may find themselves outdone by technology. In March, Microsoft’s Bing platform launched a “deals” service that, instead of providing a unique discounts, aggregates daily deals from all over the Web.
At LivingSocial’s San Francisco office, the manager oversees a team of 16 salespeople. Best sales techniques & practices are highlighted in a typical day and morning meetings and followed up by the review of deals in the last few days. “They will touch base with the merchants, ask how the deal went, answer questions, figure out next steps as customers begin to redeem the deals,” said the manager, who has an MBA from Harvard Business School and worked as a consultant at McKinsey before starting at LivingSocial 10 months ago. The sales agents follow up on promising vendors recommended by LivingSocial staffer that work from the company’s Washington DC HQ for the rest of the day.
The company also has a scheduling team, which decides when deals should go out. The salesperson will keep in touch with the vendor throughout the process to keep tabs on the number of items sold and find out if the merchant is overwhelmed and at the same time do follow-ups & back-end work. One sales agent who works from home in Atlanta KGB Deals said she joined the company because she always hears about how hot the social coupon business was. She gets full benefits, a base salary and a commission on each deal she sells. Payments such as her iPad for presentations and a car allowance are covered by the company. Basic salaries at Groupon and LivingSocial range from the mid-thirties to mid-forties range, based on Glassdoor. The companies refused to state just how much a representative make, although both said it’s a mix of commission and base.
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