Groupon’s First National Deal Blows Out
By Tom Ryan
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.
Selling at a rate
of 10 vouchers per second and overwhelming Groupon’s servers, it was by
far the daily-deal discount site’s biggest seller yet. The previous record
was 41 a minute for an architectural tour of Chicago.
With more than 10 million
subscribers reaching 85 cities, Groupon had previously only focused on daily
discounts at local merchants, often small businesses such as restaurants, gyms
and spas. But the deal doesn’t signal a change
"Local brick and mortar businesses are the foundation
of Groupon, and that isn’t changing," Julie Mossler, Groupon’s spokeswoman,
told Mashable. "Many of our customers have asked for a national
deal, so we’re testing the waters with Gap. It’s a perfect back-to-school
deal, and a great way for us to reach subscribers in Gap cities where Groupon
hasn’t yet launched. Customer feedback (positive or negative) will be
taken into consideration when we determine if we’ll do partnerships of
this scale in the future."
Analysts questioned whether the marketing gambit
was worth it for the Gap. Mashable estimated
that with sales of around 300,000 Groupons, Gap lost $7.5 million in revenue
on the $25-for-$50 coupon deal.
Patricio Robles of digital marketing publisher
Econsultancy, blogged, "Successful
businesses don’t simply move product; they acquire profitable customers. …
The risk for business relying on group buying sites like Groupon is that they’re
moving product (and lots of it) but many may not be acquiring profitable customers."
one blogger on Crain’s Chicago Business website believes
the deal enabled Gap to reach the many younger shoppers that Groupon has attracted.
Wrote the blogger, "The Gap knows what they are doing and getting into
with the offer. Their demographic is not people that read the newspaper. It’s
about time Groupon expanded into the national scene. Yes, smaller businesses
have been overwhelmed by their response but it only proves that this type of
advertising works and everyone is looking for a good ‘deal’. "
Discussion Question: What do you think of the potential for national deals
from daily-deal websites such as Groupon?
- Groupon Goes National With Gap Deal – Inc.
- Groupon Smashes Sales Records with Nationwide Gap Deal – Mashable
- Groupon goes national with Gap – Econsultancy
- Groupon’s national deal debut with Gap swamps servers – Crain’s Chicago