Are Daily Deals a Steal?

A Look at Eyecare Retail Success in the Online Voucher Market

By
By Catherine Wolinski: Assistant Editor

 
 Daily deals, like this one from Clear Sight Optical, are known to attract customers.
NEW YORK—A little over four years ago, merchants and consumers were introduced to a new trend in online shopping: the daily deal. Platforms like Groupon.com attracted bargain hunters and retailers alike with the combined effects of convenience, reduced costs and geographically specific opportunities. The deals, while offered online, came with an implied guarantee to stimulate local business by getting web shoppers into the brick-and-mortar establishments in their neighborhoods.

The quick popularity of Groupon.com, and soon after, LivingSocial.com, soon made daily deals a widely used tool for businesses and a common form of purchasing among online consumers.

Since its launch in November 2008, in fact, VM has learned that Groupon has partnered with more than 250,000 businesses across 500 markets in 48 countries, and has sold 170 million vouchers to 39.5 million Groupon customers. LivingSocial, active since early 2009, now operates in 613 markets, providing deals to 70 million members in 19 countries worldwide.


 



With a plethora of similar websites like DealChicken, AmazonLocal (NASDAQ: AMZN) and Google Offers (NASDAQ: GOOG) hitting the web coupon shopping scene, Groupon (NASDAQ: GRPN) went public in November 2011 and LivingSocial has been rumored to follow suit this year. However, both remain the most used daily deal websites, with 52 percent of online shoppers subscribing to Groupon and 30 percent subscribing to LivingSocial, according to a study by customer analytics firm ForeSee (ForeSee Daily Deal Commentary, 2012).

According to a Groupon spokesperson, health care is among the most popular categories on the site, a classification which has included numerous deals throughout the optical industry. “We’ve run eyecare related deals that have ranged from local doctors to large eyewear brands,” he said. “We continue to see a strong interest from consumers and doctors for optometry-related deals such as eye exams and products.”

The same is true for LivingSocial, said a spokesperson, where eyecare and other health-related purchases, she noted, are some of the best performers. “The businesses that tend to have the most success are ones with broad appeal,” she said. “We see a lot of success with health and beauty related offers.”

As the novelty of daily deals begins to fade, though, retailers are faced with the question of how valuable it is to partner with sites that are flooding consumer inboxes with similar offers.

VM spoke with five optical dispensaries and retail operations to determine how their eyecare businesses have fared in the aftermath of the daily deal explosion and whether their experiences have been effective.

At Clear Sight Optical in Warren, Mich., owner Charles Frontera has seen positive response with LivingSocial, Deal Chicken and a local daily deal site with a Warren news source.

“For a new practice, it’s a good way to get exposure,” said Frontera, who opened the store in April 2011. “Word of mouth, upgrades and referrals make it worth my while...It definitely draws attention and brings people into the store.” Retaining these patients, he said, is a separate endeavor. “It’s all about being patient, and hoping that in the long term, you build your practice.”

 


 Park Slope Eye owner Justin Bazan, OD often creates his own daily deals, but has also advertised on AmazonLocal. 



Justin Bazan, OD, owner of Park Slope Eye in Brooklyn, N.Y., has been running daily deals for several years, and is using them now more than ever. “I often think that if I’m willing to accept [an amount] from a vision plan, then why not with a deal that will bring me patients who pay out of pocket for products?”

Though the store recently advertised a deal on AmazonLocal, Bazan most often creates his own daily deals via Park Slope Eye’s Facebook page. By advertising offers within his own social network, Bazan benefits existing patients while attracting clientele of the same caliber. “I’m seeing them help bring in desirable people,” he said. “[Daily deals have] increased our patient base and our bank account.”

Attracting new customers is a common result of daily deal use, no matter how long a practice has served its community. SEE Eyewear, with 28 locations across the U.S., began running daily deals in its Chicago stores in 2010, due to what executives considered to be the low-risk nature of using Groupon.

“It was the first type of advertising or marketing that a company could do where if it didn’t work, you had no cost,” said Richard Golden, president and CEO. The stores saw such an increase in sales that daily deal efforts rolled out to store locations in New York, San Francisco, Nashville and Detroit the following year. “It was certainly great for us in the beginning because it was the first vehicle we ever had to generate new customers without the risk of running paid advertising,” he said. Due to the frequency of Groupon use, though, the store has begun tapering off its daily deal use. “We started early and did it heavy,” he said. “It’s not as important of a vehicle now as it used to be.”



 


 SEE Eyewear has used Groupon.com to attract business in multiple markets.  



In addition to the abundance of daily deals available to online shoppers, a common problem among retailers is what Golden described as the “Groupon mentality” belonging to customers who “will never come in unless motivated by a deal, and don’t want to spend any more than that deal.”

This mindset, however, varies between stores and their locations, and according to some, can be changed. After running three Groupon deals and one LivingSocial deal since January 2011, Crown Vision Center, a St. Louis-based store with 22 locations, has seen very positive customer and sales response.

“I think it’s a training issue in most cases,” said Kellie Spector, director of retail operations. According to Spector, each deal brought in 80 percent new customers and 92 percent of sales from redeemed vouchers included upgrades. “You just have to sell it to them as a value, like a gift certificate,” Spector said. “You don’t benefit unless you can get people to realize they want to use it toward a pair of glasses, not for them.”

Optical Experts, a single-location dispensary in Peoria, Ariz., agrees with Spector’s sentiment.

“If they don’t upgrade, you’re not making any money,” said Kenn Rosek, owner. “It depends on what you offer and what you work with.” Daily deals, according to Rosek, are certainly effective in bringing in new patients—so many, he said, that it can be overwhelming. “We had 57 percent more prescription orders last year,” he said. “It can be a lot of hassle, but the bottom line is, it’s making us more money and bringing us more business.”

Consumers, regardless of age, location or economic status, have become accustomed to the daily deal approach and continue to respond to it. With potential customers and patients inundated with such offers, it is up to the optical retailer/dispenser to determine how to make each deal a success.

cwolinski@jobson.com