Before you rush or listen any advice from Groupon Daily Deal, study the infographic below - 10  hidden cost that the daily deal costs you (which Groupon will never tell you).

Click the image to enlarge

 

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The strategy that Group Buy (aka Groupon) is using a great discount within certain period of time frame and with a group of people to tip (strong call to action) to make you do an impulse purchase. My question is - Is a Group Buy discount really a discount?

Yesterday, when I browsed a Malaysian group buy website, I spotted something wrong with the discount. I printed screen for two companies to compare the prices of printing name cards. Take a look at the images below. (I covered the company name and the group buy website name)

As you can see the highlight that I did. If you do business in Malaysia, you should know there is no way the price for 5 boxes of business cards WITHOUT MATT LAMINATION is RM125. Most Malaysian businessmen know the price is too high. If we need matt lamination, we need to add another RM15.00, which means the total is RM125 + RM15 = RM140.

After 64% discount, the price drops to RM45.00 (without matt lamination). It is still expensive compared to the company below.

This competitor (I covered the company name as well) offers only RM26.50 for 5 boxes of business cards with matt lamination.

I don't mean to attack the company or the group buy website (that's why I covered the company name and the group buy website name), but the purpose of this post is to educate Malaysian consumers that group buy doesn't really mean cheap. They may increase their prices before listed on group buy website and they use strong call to action to make you do an impulsive purchase. Be a rational consumers, try to search and shop around online, there are a lot of other options which are actually much cheaper than group buy websites.

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For those who just started their new businesses and never tried Groupon* Malaysia before. This post is for you.

After your coupon listing ended, you need to wait for three months from Groupon* Malaysia to give you full payment. For example, your deal is RM60 with 300 people buy it, after deducting 50% commission for Groupon* Malaysia, you get RM9000.00 (RM30 x 300 people). Groupon* Malaysia only gives the money RM9000.00 in 3 months by two times or three times payments (depends on which company).

Here is the problem for new businesses. Generally, new businesses don't have much cash to roll (this is not your problem if you have a lot of cash). If Groupon* Malaysia brings you a large crowd, you may need to temporarily hire new staff and buy new equipment. Moreover, you have to wait for three months to fully get your payment.

Don't forget, even you have fully get your payment, e.g RM9000.00 for the case above. The money RM9000.00 is not a profit but it is actually your cost of your services because most merchants list their deal on Groupon* Malaysia without making any profit.

Which means, on the one hand you have to fork out more money first to cater the customers from Groupon* Malaysia, on the other hand you have to wait for three months to get your full payment.

Think again, what it would be if your companies lack of cash.

Again, like previous Groupon* related post, plan your group buy marketing strategy properly.

*Groupon - Refer to any Group Buy companies in Malaysia, not only Groupon Malaysia

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Need help in doing internet marketing in Malaysia, why not contact us at 017 24 30 307 (Kent) or via contact form

If you are looking for group buy wesites to list your company deal, here is the list of top 10 group buy websites in Malaysia (Alexa Ranking) with amounts Facebook fans and Twitter followers.

Alexa Rank, Facebook Fans and Twitter Followers (30th July 2011)

Rank	Websites	Country Ranking	Facebook Fans	Twitter Followers	Description
#1	Groupon	83	45,539	3,073	Groupon Malaysia offers up to 90% discounts on exciting stuff to try every week. If you love exciting stuff, you'll love Groupon.
#2	MyDeal	86	87,789	440	Every day you'll find new hot deals on MyDeal.com.my at discounts between 50-90%.
#3	Everyday	174	8,716	430	Everyday.com.my strive to make finding Sales and Promotion a fun and easy experience. Our community vision is to enable Consumer Empowerment.
#4	MilkADeal	191	18,941	2237	A creme de la creme group-buying site in Malaysia where discounts are offered for bulk buys. You want it, we MILK it!
#5	Dealmates	215	41,802	457	Get up to 90% off the best restaurants, spas and activities in Kuala Lumpur!
#6	SuperDeals	585	35,343	373	We feature "Super Deals" to the Malaysians with incredible discount which help you to save more!
#7	JackCow	891	9,240	160	JackCow is a group-buying website that offers discount vouchers up to 90% off selected products and services offered by merchants in Malaysia
#8	ILoveDiscounts	932	36,579	870	I LOVE DISCOUNTS brings you Malaysia's Favourite Discounts.
#9	EziVoucher	1258	10,027	49	EziVoucher! Save 50-90% off usual retail price on things you like. We publish a new unbeatable deal every day in each city!
#10	e9deal	1330	32	0	Everyday, a new deal is featured on E9 Deal.

Source: Group Buy Websites' Ranking in Malaysia

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Need help in doing internet marketing in Malaysia, why not contact us at 017 24 30 307 (Kent) or via contact form

Andrine Lau:

"I am running a beauty center business namely KAcel Beauty House located at Northpoint Offices, Mid Valley City.

We implemented two internet marketing coupon campaigns on two different Group Buy websites. The results are considered quite positive. We sold more than 200 promotional vouchers on each Group Buy website. The cool part was we managed to get news sales as well as potential new customer database. However, an essential strategic marketing plan is the key and not too heavily rely on the Group Buy websites.

I have several points of views based on my experiences to share with anyone who has intention to run an internet marketing campaign on Group Buy websites:-

 

1) Control the Advertising Frequency
Just imagine what will happen if companies rely too heavily on discount coupon strategy? Yes, probably you are right; customers would not want to pay full prices for services. Using group buy strategy too frequent will potentially lead to highly competitive price in the market and bring disadvantages to your own market segment. Customers won’t buy the same services at original price and they expect more offers in the market (your competitors). Meaning to say, sooner or later, the price war begins, so called ‘Red Ocean’ strategy occurs. When your market segment happen to price war, no businesses will get benefit from it! With this approach, it can increase the sales volume in short term and have to manage it with proper marketing plan or else it could bring harms in the long run.

2) Group Buy Strategy May Not Suitable for All Type of Businesses
No doubt every successful businesses must have their own success stories and strategies. As business owners, we need to justify the best strategies align with the business goals to maximize the profits with the minimum capital. First, if you have a prestige brand e.g. Coach, Louis Vutton, Hermes, Jaguar, why would you discount? That goes against your brand. Second, if the companies are struggling, a well strategy plan is essential before decide to run group buy marketing campaign. Group buy is actually a double-edged sword; it can bring profits to the companies but also can be a loss to the companies. If the scenario’s that the companies are struggling for business, group buy will take 75% (50% discount to consumers, 25% commission to group buy companies) from you as advertising fees (even though the setup fees are free of charge). The more people buy your coupon deals, the more 75% discount you have to give away. And you may need to hire new staff (which is a cost) and get new equipment (another cost) to handle the crowd from group buy companies. The question is, not all group buy customers will come back to you.

3) Less than 10% of Returned Customers
From the customer’s point of view, there is nothing wrong with the customers constantly looking for great deals (cheap). Due to the competitive market nowadays, as business owners need to be keeping up the competency level and doing things very much differently to retain the customers and more importantly to maintain a quality services. That’s the only way to gain customers loyalty.

One Thing to highlight is that customers didn’t pay enough attention regards terms and conditions. For example, some customers could blame us for not offer what have promised, but in fact, we have stated clearly all the terms and condition.

4) Lack of Quality of Services from some Group Buy Companies
Choose the right Group Buy companies would keep you free from some hassle process. Why? Some of the Group Buy companies didn’t provide their services professionally to us. Their intention was only focus to gain more businesses from us. They were so eager to get deals from us until what they have promised to us, they didn’t deliver.

I hope after you read my testimonial about Group Buy strategy, you will manage your Group Buy marketing campaign carefully.

Andrine Lau Onwer of a  - Beauty Centre Business - KAcel Beauty House. She has more than 10 years of experiences in beauty industry.

 

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Need help in doing internet marketing in Malaysia, why not contact us at 017 24 30 307 (Kent) or via contact form