Trends

As Daily Deals Go National, Will They Get Less Generous?

(iStockphoto)

Since their early days, daily deal websites have focused is on local merchants – helping small businesses enlist new customers, and customers discover new merchants (and save a buck) along the way.

Lately, however, they are increasingly offering deals from national retailers and e-tailers.  From LivingSocial’s hugely popular Amazon.com deal and the recent Fandango promotion, to Groupon’s Nordstrom Rack or Barnes & Noble coupons, daily deal websites are trying to strike a balance between local and national promotions. While they may not be an everyday occurrence, one thing is for sure: consumers should expect to see more deals from well-known brands.

“The daily deal marketing channel is becoming real,” says Jim Moran, co-founder of YipIt, which aggregates daily deal offers. “You’ll start to see major national chains start to work with a whole bunch of daily deal websites.”

According to YipIt, which also tracks each offer’s popularity with consumers, BuyWithMe’s 73% off a 10-week USA Today subscription and Plum District’s $20 for $40 worth of Pampers diapers from Diapers.com were just two of the many successful deals from national brands.

Sure, retail behemoths like Amazon.com and Barnes & Noble could run their own promotions — but the idea behind daily deal websites is to tap into a new customer base, and a merchant running (and promoting) its own deal won’t accomplish that. It doesn’t hurt that some of the major retailers are aligning themselves with daily deal sites, giving them direct access to the services. Amazon.com, for example, has invested in LivingSocial.

Groupon is no stranger to running daily deals from national retailers, although it doesn’t do it on a regular basis.  Two highly successful Groupon deals came when it sold discounts at Nordstrom Rack and Barnes & Noble, partly because both deals ran in every market Groupon serves. Other major retailers to run daily deals on Groupon include Gap and American Apparel.

Although Groupon spokeswoman Julie Mossler says the company is focused on local markets, she adds that Groupon is seeing a lot of interest from national retailers.  National retailers are drawn to Groupon not only because of its 60 million customers, but because some retailers may not have a strong social media presence or understand fully how to utilize Facebook and Twitter, says Mossler.

Plum District has been running national deals alongside deals from local merchants for the past few weeks. Megan Gardner, the site’s chief executive officer, says larger national retailers approach Plum District because of its target market of moms and families. Recent deals include offers by National Geographic, Best Buys’ Geek Squad and Diapers.com.

BuyWithMe.com, meanwhile, has traditionally stayed away from offering deals from national retailers or e-tailers, but leading up to Valentine’s Day it teamed with winetasting.com and wineenthuasist.com to launch daily deals. Andrew Moss, the site’s founder, says the company held off on running deals with major brands because it was in growth mode and is very focused on the local merchant. Still, the wine deal was very successful.

BuyWithMe has also worked with ShutterFly, the online photo store and is talks with other e-commerce companies to run daily deals.  Its partners offer discounts of 50% to 90%, regardless of whether it’s a local or national retailer.

Which brings us to the big question underlying this trend: Can we expect deals from national retailers to be less generous than those from local merchants? Groupon’s Mossler says that even though national retailers have more clout, Groupon expects all partners to work within its guidelines, which call for discounts of 50% to 90%.

But Gardner’s experience at Plum Distric is perhaps more telling: while the minimum discount a national or local retailer usually offers through the site is 50%, local retailers may offer discounts of as much as 70%. “The local retailer is more willing to play with a higher amount,” Gardner says.