Doug Stephens

Groupon's First National Deal Blows Out

August 23, 2010

FROM RETAILWIRE:
Groupon Inc.'s first nationwide deal -- an offer from the Gap for $50 worth of merchandise at $25 -- sold 445,000 vouchers for the retailer last Thursday, bringing in $11 million in revenue. What do you think of the potential for national deals from daily-deal websites such as Groupon?      [more...]

First of all, I'd like to understand how we've arrived so easily at the 7.5 million dollar loss. Is the assumption here that there were absolutely no incremental store sales resulting from this? I think that's flawed reasoning and at best questionable math.

Secondly, although it's tough to measure, there has to be some accounting for the PR value of this promotion. This was THE retail news story of the day and we're still talking about it. What's that worth? Lets just say lots.

Lastly, there's an increasingly immutable law developing as it relates to brands and social marketing; that being that Pioneers are winning. Brands that invest in and explore new social marketing vehicles are performing better than brands that don't.

Between this and their foray into Foursquare, The GAP has clearly recognized that social marketing is a key path for the brand.

So, I applaud the move--whether it pays for itself short term or not.