Is the Daily Deal Social Shopping?: An Empirical Analysis of Customer Panel Data |
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| Institution: | 1. Bates White Economic Consulting, 1300 Eye Street NW, Suite 600, Washington DC 20005, USA;2. Mays Business School, Texas A&M University, College Station, TX 77843, USA;3. College of Business Administration, Seoul National University, Seoul, Republic of Korea;4. College of Business, Gachon University, Kyungki-do, Republic of Korea;1. Magnetic Resonance Imaging Institute for Biomedical Research, Bingham Farms, MI 48025, USA;2. Magnetic Resonance Innovations, Inc., Bingham Farms, MI 48025, USA;3. The Department of Medical Imaging, The University of Saskatchewan and Saskatoon Health Region, 103 Hospital Dr, Saskatoon, SK S7N 0W8, Canada;4. The Division of Neurology in the Department of Medicine, The University of Saskatchewan and Saskatoon Health Region, 103 Hospital Dr, Saskatoon, SK S7N 0W8, Canada;5. Department of Biomedical Engineering, Wayne State University, Detroit, MI 48202, USA;1. Bursa Orhangazi University, Department of International Trade, 440 Mimar Sinan Mh. Ankara Yolu Cd., Bursa, Turkey;2. Boston University, Department of Electrical and Computer Engineering, 8 Saint Mary''s Street, Boston, Massachusetts 02215, USA;3. Aston University, Aston Business School, Operations & Information Management, Birmingham B4 7ET, UK;4. Peking University, China Center for Health Development Studies, 38 Xueyuan Rd, Beijing, China;1. School of Traffic and Transportation, Beijing Jiaotong University, Beijing and 100044, China;2. College of Engineering and Applied Science, University of Cincinnati, Cincinnati and 45221, USA;2. Department of Internal Medicine, Santa Clara Valley Medical Center, San Jose, California;3. Swiss Institute of Allergy and Asthma Research (SIAF), University of Zurich, Davos, Switzerland;4. Division of Pulmonary, Allergy, and Critical Care Medicine, Stanford University, Stanford, California |
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| Abstract: | Shortly after Groupon started its business in 2008, selling one deal a day with substantial price discounts, daily-deal sites became new online shopping places for many people. Starting with Groupon, most daily-deal sites required that voucher sales be higher than a predetermined number before deals become active. This feature, known as the “tipping point,” was a unique characteristic of the daily-deal business and is identified as one of the most prominent features of social shopping. Most daily-deal sites also required that a redemption period start after a deal was over and be fixed, usually 90 days, presumably to maximize the promotional effect of deals by encouraging rapid voucher redemption. The question remains, however, whether such features actually contributed to the success of the daily-deal industry. Using individual-level panel data from a major daily-deal site in Korea, we analyze whether consumers' purchase and redemption behaviors were affected by these features and how consumers changed their behaviors as they continued to purchase and redeem vouchers over time. We find that the presence of the tipping point did not boost voucher sales and likely deterred new customers from buying deals right away. We also find that new customers tended to redeem their vouchers quickly, and this likely caused the small businesses that offered deals to become overwhelmed. It is not surprising, given our findings, that both Groupon and the Korean daily deal site abandoned the use of the tipping point and modified redemption rules. |
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