Is it worth selling jewelry using sites such as Groupon and LivingSocial? As a long-term sales strategy we’d advise you to choose a different sales path, but if you’re looking at these type of sites as part of a marketing campaign – then maybe – just maybe, they could be right for you.
The cost of Groupon: We’ve crunched the figures to see how much a company can make (or lose) by offering product as a Groupon deal. Price-wise these are not for big ticket items – most products on sale run at under $100. Take for example a jewelry item that you normally sell for $200, but on Groupon, it will go for at least 50% below. So the now $100 piece goes on sale, but Groupon takes 50% of that, so you’ll be receiving $50 for each piece sold. That’s 25% of what you’d receive if it wasn’t on Groupon. Also remember you’ll be hitting a much, much larger audience – so that 75% loss will be repeated hundreds of times over.
Financially not such an attractive option any more, but remember you’ll be exposed to a huge audience, pulling in a significant number of new customers and guaranteed to only pay for what you sell. So, in a weird alternate universe, if you don’t sell – you’ve achieved a remarkable marketing campaign for very little outlay.
In theory, these sites sell themselves to companies as helping introduce buyers who potentially will become lifelong customers. In reality it’s all about people looking for the biggest deal, but that’s not to say some bargain hunters won’t then become repeat customers. These sites are also good options if you’re looking to liquidate a particular style or generate immediate cash flow.
A few points to consider before launching your ground-breaking deal:
Set Limits: Cap the number of pieces you’re offering so once you’ve sold out, the offering is removed from the site. Also set a limit for redemption so you do not have to honor a purchase a year or even more after the coupon was sold.
Remember It’s A Luxury Product. You may be on a deal site, but you’re offering a luxury product. Make sure your website and service is par none when it comes to selling the luxury experience. You’re not a deal site – you’re just using one to drive traffic, so make sure your service and image reflects the product you’re selling.
Ready-Steady-Action: How are you going to gauge the success of your campaign? How will you profit from participating in these sites, bearing in mind most products are sold as loss leaders? What effect did the increased workload have on costs and quality? How many people returned in the next week? Month? Year? Knowing specific results helps plan future promotions. If you don’t know how to measure a campaign’s success, then think twice before moving ahead.
Info-mining: It’s marketing 101. Capture as much information as possible. Online offers have an advantage because people have to provide contact information to receive the product or service. Give people visiting your site a reason to share their information by offering exclusive email offerings, a newsletter or other value-added benefits.
Always say ‘thank you’: Let them know you truly appreciate their business. A kind word post-sale can make all the difference in turning a satisfied customer into a satisfied repeat customer.
Next week we see if selling online means discounting? How can you achieve strong online sales without having to revert to the coupon/promotional/ discount phenomena? Can you really sell online at full price and how does online discounting impact your bricks and mortar business?