Internet Coupon Sites Bad For Business

Most of us have either browsed or bought a few of those famous internet coupons that give great deals on everything from spa treatment to skydiving. Who doesn’t love saving 50% off on services and activities? For one, the business that offered the coupon.

Over-Promised, Under-Delivered

Sites like Groupon have made millions by bringing in businesses to offer coupons in exchange for a new customer base, and it worked. So what is the problem? The businesses have found it tough to maintain the new customer base when a competitor offers a similar coupon for services just down the street. Businesses say that customers buy the coupon and use it, once, and then customers are never seen again. Basically, the internet coupon industry breeds one-time customers, not loyal customers.

Stealing Deals

Not only are customers salon hopping with a different coupon in every hand, but the overall internet coupon trend is fading. Consumer fatigue has set in as the economy suffers, which only leaves businesses back to square one.

Haven’t we seen this before? In fact, yes, we have. Jasper Malcolmson, co-founder of the deal site Bloomspot is comparing the effects of the over-promised, under-delivered couponing trend to subprime loan during the housing boom.  Malcolmson says,” (Lenders) were giving these mortgage to every consumer regardless of whether they could handle it.” “But sooner or later you find that you can’t make great offers to people if they’re not making you money,” says Jasper.

It appears as what we have here is an influx of businesses competing to hand out great deals to anyone that is willing to buy them, only to find themselves in financial trouble down the road when consumers soak up the benefits and run.  Let’s hope businesses see trouble coming before ending up in debt or needing the help of bankruptcy to prevent the doors from closing.