As the Internet has taken hold in virtually every aspect of modern life, an ongoing debate has emerged about the impact of online commerce on bricks and mortar retailing. While some have written the obituary for traditional shopping, ICSC, led by its President & CEO Michael P. Kercheval believes that the growth of online shopping opportunities will work in tandem with traditional shopping—that this union has the potential to be a mutually beneficial for both types of retailing.
A perfect case in point is the hugely successful social networking and business website known as Groupon. An ingenious idea, Groupon is able to bundle the best in e-commerce, social networks, and support for local businesses. Brilliant! Here’s how it works: Groupon has busy bees in scores of American cities developing special, time-limited (and deeply reduced) offers for a whole variety of goods and services, in cities from Milwaukee to Midland to Minneapolis. Groupon encourages “social” experiences in purchasing among friends, creating a critical mass of new customers for local businesses of all kinds.
The Groupon concept is appealing on many levels. For those who value the excitement of the “secret prize,” each morning brings a delicious grab bag of buying opportunities, conveniently dropped in our email box. The sale items are standard goods and services and truly unique buying opportunities. By introducing buyers to such a unique and interesting bundle of goods and services on sale, it keeps the shopping experience fresh and exciting. And there’s more: as individuals commit to online purchases, they may even encourage their friends to do the same, creating a community retailing experience.
This online operation harnesses the efficiency and omnipresence of the internet to drive consumers to local businesses. The merchants have an entirely new advertising tool, and the occasion to court loyal customers for the future. Groupon is certainly catching on. According to a new report produced by CBS News, just two years ago, Groupon had 400 subscribers. It now has 40 million! “Groupies” can be found in 35 countries and 335 Cities. So promising is this business model, that recently, the Andrew Mason, the Founder of Groupon, passed up a buyout offer from Google reported to be $6 billion.
In the spirit of writing a more informed blog posting, I signed up for Groupon a few days ago, here in New York. I was not only interested in seeking purchases for myself, but hoping that it would stimulate creative gift-giving ideas for the holidays. And it worked! With yesterday’s offerings of bargain basement prices for everything from hair/beauty salon services, to drinks and food at specialty restaurants, to helicopter rides over the Big Apple, I found a gift for a 30-something girlfriend with the appropriately sophisticated tastes of a New Yorker. The item that caught my eye was three-day “detox” raw food/vegan diet to kick off the year. This high-end establishment advertising apparently has a celebrity following and will drop off meals to my “gifted” young friend’s home. And, the detox diet is sold at half-price! Everyone is a winner—my friend has a convenient, useful present to enjoy, and I look like a super-star gift giver, all while facilitating the potential of a new, long-term customer.
I was so pleased by this experience, I signed up for daily “deals” in my home state. By keeping my finger on the pulse of options in Oklahoma City, I could find nifty gifts suggestions for my sister who lives in lovely Norman, Oklahoma, just outside the City—all from the comfort of my laptop at home.
So, Mike Kercheval, our President is right—there are outstanding, innovative ways where online commerce and bricks and mortar shopping can not only co-exist, but can complement each other. The only loser in this entire scheme may be my credit card bill, but that’s another blog posting.
ICSC Leadership Development Team