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          Ever since the dawn of the internet advertisers have taken themselves to a new level. Although sometimes convenient that they will offer products to your liking, it is never fun to have to delete hundreds of timeshare emails just because you clicked on a weekend getaway advertisement. I understand that on one side of the coin advertisers look to increase sales by offering the consumer what they think they want; however, by doing this consumers are not given a fair chance to freely decide for themselves. It seems like nowadays online marketplaces will either recommend a product or show similar products based on past customer purchases.  So where do we draw the line?

Reasonably speaking, a reasonable line has recently been drawn. According to a Federal Trade Commission (FTC) preliminary report there are three primary recommendations:

(1) Privacy by design      

(2) Simplified choice for consumers on how their data is handled

(3) Greater transparency for consumers on privacy practices

So what does this mean and how is it enforced?

          Simply put it asks website administers and advertisers to provide us with more security when dealing with our personal data and offer us a simpler overview of the privacy agreements we always agree to but never read.  However, there are no recommendations on how to enforce these regulations. The main purpose of the FTC is to prevent fraudulent and unfair business practices, but if they do not enforce their new recommendations all it will create is a false sense of security. 

          I think although this is still a legally pointless step, it is still a step in the right direction. There is the coming trend of security and privacy above all, that future advertisers will soon have to adjust to. With the plethora of information available online, consumers should have the ability to search for their own products and not be manipulated. I think providing the option to either track or not track recent purchases will give consumers an advantage in the never ending war between advertising spending and consumer buying. Hopefully this will begin a trend worldwide.

Groupon - Deal or No Deal?

          Nowadays, it seems like every couple of months there is a new company with an “innovative” idea having sales in the millions. This time it looks like Groupon.com is the website to join, if you want the latest deal. Similar to past e-commerce businesses, Groupon.com is able to broker great deals from local companies in your area. Unfortunately, I feel that Groupon.com will face the same issues that led to the demise of many past companies.  How will Groupon be able to sustain their competitive advantage? What makes this website so different from past, current, and future deal making websites?

          The Groupon Approach would seem to work best when companies sell an item that is overstocked rather than a service. Groupon.com offers discounted deals if a certain number of items are sold, but who is it really good for: the buyer, the seller, or just Groupon? 

 

          As a consumer we know about all the advantages and conveniences of the internet. In fact, we’ve all had that tremendous feeling of purchasing a $200 book online for just $75, along with purchasing that $25 item for no reason just because it was a deal.  I still remember buying 100 acres on Mars just because it was $0.99 – I’m looking to hit oil. It’s like being introduce to the online crack we call eBay for the first time. Eventually buyers will realize that they do not need helicopter lessons, unlimited carnival rides, or the 4 week massage package just because it is a good deal. As for the seller – do they truly benefit? It is important to attract customers, but when the profit margin is so small – is it worth it? In fact, according to a blog post on TechCrunch, a recent spa salon sold 4,000 massages valid for a year. On the outside this looks great, but when these $100 massages are only netting $25 (not including spa costs), the company must take a step back and think can we handle 15, $25 massages on a daily basis? In addition, once a customer purchases an item heavily discounted they’ll continue to look for similar prices. Although Groupon helps generate new customers, it does not generate the repeating customers that companies expect. Low profit margin and price sensitive, non-repeating, customers are some of the issues that led to the demise of similar companies such as Restaurant.com. Businesses must decide which individual items would provide the best profits as there are many positive and negative examples.   

          To distinguish themselves and make this company viable long term they need to make better offers to both the buyer and seller. Have multiple offers that appeal to everyone. Most buyers will only log on once a week and when they do, helicopter lessons are probably not on their list of things to buy. In addition, sooner or later an online company will come across and offer businesses not only a better percentage fee than 50%, but also a way to generate and retain new customers. This can be done a variety of ways – the best would probably be through a promotion package that offers not just one item but various items available year long.

          If sold to Google, Groupon.com will have to find a way to successfully manage the influx of customers and make the savings and profits appealing to both buyer and seller.