http://www.businessweek.com/news/2011-11-17/daily-deal-sites-stand-to-get-100-million-in-holiday-gift-sales.html

Bloomberg News

Daily-Deal Sites Stand to Get $100 Million in Holiday Gift Sales

November 17, 2011

Nov. 16 (Bloomberg) -- Groupon Inc., LivingSocial.com and other daily-deal sites are vying for as much as $100 million in online-coupon sales this holiday season as shoppers look to the Web for discounted gifts.

U.S. consumers will spend $80 million to $100 million on daily-deal gifts between Thanksgiving and Christmas, estimates the website Yipit, which aggregates offers from a range of companies. The amount is up from $15 million to $20 million during the same period a year ago, Yipit said.

Daily-deal companies are courting holiday shoppers with a variety of offers, including Christmas tree bargains, helicopter flights and discounted stays in the Bahamas. These sites appeal to people who want to share experiences, rather than just products, said Jim Moran, co-founder of New York-based Yipit.

“Because of daily deals, holiday gifts aren’t limited to physical goods anymore,” Moran said. “Now you can buy family and friends fun dining experiences, classes and services no matter where they live.”

In a poll of 10,000 Yipit users, more than 90 percent said they were likely to buy a daily deal as a gift this year.

Groupon, which held an initial public offering earlier this month, prepared for the shopping season by analyzing shopping trends on its site last year.

Grouponicus Site

“We looked at all of the deals we ran and all of the deals that we sold, and we wanted to zero in on things that were resonating with folks during the holiday season,” said Aaron Cooper, a senior vice president at the Chicago-based company.

Groupon expanded its holiday shopping site, called Grouponicus, to more than 40 cities, up from 20 last year. It also added more deals involving unique experiences, including tickets to the Ellen DeGeneres television show and a half-price helicopter ride in New Jersey. Many of the holiday discounts are available for three or more days, instead of the site’s usual 24 hours, to give shoppers more time to decide, Cooper said.

The holidays may see an increase in national brands promoting goods on discount sites, according to Peter Krasilovsky, vice president and program director at research firm BIA/Kelsey.

“What we’ll see at Christmas this year, more than we have in the past, is a lot of national brand sales,” Krasilovsky said. “Some of these national brand deals may provide an alternative to Black Friday,” the day following Thanksgiving that is popular with shoppers. It’s so named because that’s the day many retailers theoretically go into the black for the year.

Clothes, Movies

American Apparel Inc. is offering a $50 gift certificate for $25 on Groupon’s page of holiday offers. Fandango will offer discounted movie tickets through daily-deal service Tippr.

LivingSocial, the second-largest daily deal site, plans to donate a portion of the proceeds from some deals to a charity between Dec. 5 and Dec. 16 -- continuing a tradition from the past two years. The site will also focus on offers that are suited to gifts, said Maire Griffin, a spokeswoman for the Washington, D.C.-based company.

“Every deal that we offer during that time is a really giftable deal -- a lot of spas and restaurants -- as opposed to deals that aren’t necessarily giftable, like Botox or auto mechanic work,” Griffin said.

Martin Tobias, chief executive officer of Tippr, said he expects a 30 percent increase in sales during the holiday season. Last year, the company offered a precooked fried turkey that was popular around Thanksgiving.

Another site, Bloomspot, expects a 35 percent increase in sales from holiday shoppers, according to CEO Jasper Malcolmson. That’s partly because people are buying more expensive items as gifts, such as travel packages that cost more than $100.

Even though some shoppers will stuff stockings with online coupons, the industry may not get as big a holiday jolt as e- commerce in general, said Sucharita Mulpuru, an analyst at Cambridge, Massachusetts-based Forrester Research Inc.

“These prepaid voucher sites tend to be driven by the opportunity to buy a great deal and less by the season, so I don’t think that they get the same holiday lift that other companies do,” Mulpuru said.

--Editors: Nick Turner, Stephen West

To contact the reporter on this story: Douglas Macmillan in New York at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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