Daily Deals Move Product if You Can Slash Your Margins
Daily deals and other forms of coupons and special offers during the holidays can act as a double edged sword for online marketers. It is clear that the addition of these types of discounts can boost holiday sales, but in many cases the lower price required to make the coupon attractive cuts too far into the product's margin to be sustainable. Daily deals and coupons are best for loss leaders as long as your entire strategy is integrated into the offer so that you are proposing and "gently prodding" the consumer towards a selection of more reasonably priced merchandise.
Many e-tailers are discovering that the economics of major deal sites are prohibitive, as they generally require a 50% commission on top of the price to the consumer, which is also around 50% off. If you can't afford to sell a $100 product for just over $20 then the deal sites are not for you. By placing deeply discounted daily deals and coupons exclusively within your email and social media
marketing campaigns, you can bypass the major deal site commission and keep all you earn. The flip side to this strategy is that if you have a warehouse full of merchandise that you want to blow out regardless of cost, the major deal sites can empty it in a heartbeat.
Prior to engaging in any daily deal or coupon offer, meticulously evaluate how many products you can afford to sell in order to determine a cap number. This calculation should be based not only on financial factors but also in consideration of the stress that the rush to buy will place on your personnel, shipping and receiving, and website capacity. If your coupon crashes your server, backs up shipping past Christmas, or causes a three-hour on-hold pileup on your customer service toll free line, you're sabotaging your entire holiday campaign.