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“Deal-of-the-day” Market Analysis

Jan 2014

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“Deal of the day”

“Deal-of-the-day” (also called “flash sales” or “one deal a day”) is an ecommerce business model in which a website offers a single product for sale for a period of 24 to 36 hours.

Potential customers register as members of the deal-a-day websites and receive online offers and invitations by email or social networks.

The concept gained popularity in 2004, when the www.woot.com was launched.

By the end of 2006, the deal-of-the-day industry expanded to more than 100 sites.

In November 2008, Groupon was founded – the fastest growing one-deal-a-day company and the market leader.

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Deal-of-the-day business model

Merchant offers deals on the one-deal-a-day company’s

website

Customers buy coupons

One-deal-a-day

company pays

Merchant’s share

Customers redeem coupons

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Russian deal of the day market

Started to develop in 2010 in Moscow and Saint-Peterburg Rapidly spreaded to other regions Market leaders: Groupon and Biglion After fast growth in 2011-2012, the market began to slow down. Possible

reasons: Groupon shares rapid fall on NYSE Gradual decrease of small companies number, which generally

comprise majority of merchants selling coupons through one-deal-a-day sites.

Loss of credibility due to rather frequent unfair practices of merchants

BigBuzzy bankruptcy The market players try to change the business model in order to

differentiate risks by including online retail and customer loyalty programs

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Market Players

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Description

Cities 70Merchants Services, travel, clothes, shoes, goods

for children, consumer electronics, household goods, food, entertainment, sports

Payment methods Bank cards, QIWI, Evroset, Yandex Money, Webmoney

Online shopping Yes

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Customer feedback

They don’t publish negative feedback, so they don’t let the potential clients to make the right choice.They don’t control the quality of merchants’ work.

My wife and I got back from Thailand yesterday. Everything was OK, no difference with the same service provided by a tour agency.

Bought car service and car wash coupons several tmes – everything was OK. Also, bought toys for my son.

I would advise Biglion to indicate the real delivery dates. I got my parcel in a month and a half instead of 2 weeks promised by Biglion.

Bought a manicure service coupon and paid for it. Barely could contact the beauty salon. I couldn’t sign up, all the time slots available for the coupon period are already taken…

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Strengths and Weaknesses

Strengths Weaknesses

• Variety of discounts available every day• User-friendly web-site• Optimal coupon validity period – from 2 to 4 months starting from the purchase date• “Bring a friend” bonus• Online shopping

• Negative feedback is never published on the website• In case there are problems with the merchant Biglion very rarely stands on the client’s side• When many coupons are sold (more than 1000), the service quality often gets worse • Printing coupon is obligatory• Some service providing requirements are not very comfortable for the clients – for example, obligatory booking in restaurants and cafes. • Long goods delivery period (upto 2 months)• In some cases, the coupon price might be the same as if the client bought the service from some other merchant directly.

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Description

Cities 90Merchants Services, travel, clothes, household

goodsPayment methods Bank cards, QIWI, Evroset, Yandex

Money, WebmoneyOnline shopping Yes

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Customer feedback

Bought a tour to Loo. The service was awful, it didn’t correspond at all to the conditions described in the coupon. Our negative feedback wasn’t published on the website.

I am very glad with my trip to resort. All the services included in the coupon were provided.

Groupon doesn’t assume any responsibility for the quality of service provided, at least I would not advise buying tours.

I wouldn’t advise to buy anything from Groupon. We bought show tickets, but we couldn’t use them, as there were more tickets sold out than places available.

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Strengths and Weaknesses

Strengths Weaknesses

• Variety of offers on the website• Rather effective customer support• In case there are problems with merchants Groupon usually returns the client’s money• Printing coupon is not obligatory• “Bring a friend” bonus• “Bonus offers” that may be bought for “bring a friend” bonus points • Online shopping

• When many coupons are sold, the service quality often gets worse • Short coupon buying period (1-3 days)• Negative feedback is not published on the website• Short coupon validity period (1-2 months) • In some cases, the coupon price might be the same as if the client bought the service from some other merchant directly

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Description

Cities 95Merchants Services, travel, clothes, shoes,

consumer electronics, sports, household goods, food, entertainment

Payment methods Bank cards, QIWI, Evroset, Yandex Money, Webmoney

Online shopping Yes

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Customer feedbackMade a good deal by buying air tickets. Besides, bought pizza several times. Everything was OK. Also, travelled to Tallinn. I was very disappointed with the tour and the quality of service provided, but КупиКупон helped to solve my problem.

I ordered clothes from an Internet store 2 months ago. Still haven’t got the parcel, and КупиКупон doesn’t agree to reimburse the money.

When I tried to use my coupon at the car wash, I was told that the service was closed, and I was supposed to get the money back. However, I never got my reimbursement.

I never had any problems with КупиКупон. I got the money back several times without any problem.

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Strengths and Weaknesses

Strengths Weaknesses

• Variety of offers on the website• Coupon buying period from 2 to 15 days• Online shopping

• Printing coupon is obligatory• Non-user-friendly website• Relatively high coupon prices• In case the merchant fails to provide a good quality service Купикупон doesn’t always help the clients to solve the problem• Non-effective customer support

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Description

Cities 102Merchants Services, travel, household goods,

food, entertainmentPayment methods Bank cards, QIWI, Yandex Money,

WebmoneyOnline shopping No

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Customer feedbackFew offers on the website. Problems with website functioning.

Bought a coupon that provides a discount for purchasing an Ipad. In 2 weeks, the Internet store website stopped working, the phones wouldn’t respond. No Ipad or money back!

Vigoda.ru provides false information concerning the good or service description and reimbursement policy. They always refuse to help in case of complaints.

Ordered a toy for my child 2 months ago. Never got it. Vigoda.ru refuses to reimburse the money.

Bought a coupon that gives a 50% discount for any goods purchase in an online store. The item that I needed was not available, so I asked for a reimbursement. After a long discussion, vigoda.ru returned the money.

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Strengths and Weaknesses

Strengths Weaknesses

• There is an option for leaving comments for the offer• Printing coupon is not obligatory• “Tell a friend” bonus

• Coupon buying period 1-2 days• Non-user-friendly website• Commenting option is non-user-friendly• In case the merchant fails to provide a good quality service Купикупон very rarely helps the clients to solve the problem

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Description

Cities 46Merchants Services, travel, sports, household

goods, food, entertainmentPayment methods Bank cards, QIWI, EvrosetOnline shopping Yes

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Customer feedback

I’m really disappointed with customer service. One can’t get any help when calling by phone. They offer to write an email, but they reply in 3-4 weeks instead of 10 days as declared.

Never had any problems with kupibonus.ru. I always pay with a bank card.

I don’t have any negative experience with this company. Always got the service as stated on the website…

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Strengths and Weaknesses

Strengths Weaknesses

• Variety of offers on the website• There is an option for leaving comments for the offer• Online shopping

• In case the merchant fails to provide a good quality service Купикупон very rarely helps the clients to solve the problem• Negative feedback is never published on the website • It is necessary to activate the coupon within 14 days starting from the date of the purchase• Non-user-friendly website

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Comparative analysisVariety of discounts User-

friendly website

Long delivery period

Variety of discounts

Variety of discounts

Non-user friendly website

Non-user friendly website

Printing coupon is not necessary

Short coupon buying period

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Contact information

Yana AvakyanIndependent consultantE-mail: yana.avakyan@gmail.com