Trillion Dollar Industry | Deals 3D
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Transcript of Trillion Dollar Industry | Deals 3D
A Trillion Dollar IndustryJim Moran | @jdmoran | blog.yipit.com
Deals 3D: Monday, July 18
DAILY DEALS TODAY
The Daily Deal Stack
MERCHANTS
CO
NSUMERSMerchant Services
SOON…Merchant Agencies
Consumer Services
White Label Publishers
Vertical Deal Sites
Data
Exchanges
Aggregators
Daily Deal Sites
New Multi-Billion Dollar Industry
Industry Leaderboard
SUSTAINABLE?
High Repeat Rate
43% of daily deal merchants in May had run
at least one prior deal
Shifting Ad Spend
Reducing Other Advertising Spend After Running Daily Deal
Yes 43%No 57%
Data from Yipit phone survey of SMBs who have completed a Daily Deal in the last 12 months. 80 responses.
High Merchant Satisfaction
Would You Use a Daily Deal Site for Another Promo-tion?
Yes 93%No 7%
Data from Yipit phone survey of SMBs who have completed a Daily Deal in the last 12 months. 80 responses.Groupon’s reports repeat interest at 97% (grouponworks.com)
Breakage Rate ≤20%
Recent data on Groupon is consistent: (i) breakage of 10% (TechCrunch, 8/14/10), and (ii) 20% redemption in month 1 and 15% redemption in month 12 (Chicago Tribune 8/16/10).
Profitable at 19% Retention
Assumptions from industry research and Yipit phone survey of SMBs who have completed a Daily Deal in the last 12 months. 80 responses.
Merchant Profitability Per Voucher
Drivers Gross Profit / VoucherDeal Assumptions Existing CustomersDeal Value $50 Revenue from Groupon $2.2
Deal Discount 50% Revenue from Overage1 1.1Deal Price $25 Revenue from Existing Customers 3.2Overage % 14% Less: COGS 3.4Commission % 40% Less: Cannabalized GP 1.8Cost of Goods Sold % 40% GP from Existing Customers ($2.0)Credit Card Fee % 2.5%
GP from Breakage $2.9Buyer Mix AssumptionsUnredeemed (Breakage) % 20% New CustomersCurrent Customer % 20% Revenue from Groupon $8.6
New Customer % 60% Revenue from Overage1 4.2Revenue from Existing Customers 12.8
Repeat Visitor Assumptions Less: COGS 13.7
Conversion to Repeat %23 19% GP from Existing Customers ($0.9)Repeat Visits 3Vouchers per Customer 1.5 New Repeat CustomersCurrent Customers Already Going % 25% Revenue from Repeat Customers $13.0
Less: COGS 5.2GP from Existing Customers $7.8
Incremental GP / Voucher $7.9
FROM BILLIONS TO TRILLIONS
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Much Larger Than Local Advertising
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Trillion Dollar Industry
Increase Penetration- Global expansion- Demographic expansion- Channel Expansion
Daily Deals
Increase Share of Wallet- Reduce Friction: Credit Cards, mobile- Personalization- Expand Categories- More Merchants
1%
% of Consumers
% of Total Spend1%
One Scenario
HOW?
Daily Deals Today
&
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Beyond Email
>50% of clicks from Yipit’s now through web users
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More Categories
Total Urban Daily Deal PenetrationClothing & Services $120,907 $675 0.56%Entertainment 188,756 422 0.22%Healthcare 219,105 231 0.11%Food 446,622 370 0.08%Transportation 536,510 132 0.02%Rent & Mortgage 1,183,074 0 0.00%Insurance & Pensions 383,469 0 0.00%Other 359,358 38 0.01%Total $3,437,801 $1,869 0.05%
$ in Millions - Source: Bureau of Labor Statistics, DOL
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Not Just Discounts
~ 1 in 4 offers aren’t “deals”
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National Brands
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Beyond “Prepay”
Groupon Now!LivingSocial Instant
ScoutMobBlackboardEats
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Frictionless Redemption
WHO WILL WIN?
Amazon
Everyone
MERCHANTS
CO
NSUMERSMerchant Services
SOON…Merchant Agencies
Consumer Services
White Label Publishers
Vertical Deal Sites
Data
Exchanges
Aggregators
Daily Deal Sites
ABOUT YIPIT
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Data Product OverviewIndustry-wide Reach- Tracking 500+ Competitors across
all major North American markets
Comprehensive Deal Database- 100,000+ historical deals- 20,000+ new deals per month
A Powerful and Versatile Tool - Source new, high-quality merchant
leads- Analyze past offers to optimize
merchandizing- Track performance of competitors
30+ Current Partners
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Recognized Industry ExpertiseSpeakers at Industry Conferences Expert Commentary
Asked for Advice by Major Companies
THANK YOU
Thank You
blog.yipit.com@jdmoran