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Deal or No Deal?

Posted on 6.22.2011

The Web industry’s enthusiasm for daily deals sites such as Groupon and LivingSocial came into question recently following the release of several negative studies from Rice University. Among the findings was the fact that less than 20 percent of users return for full purchases after receiving online discounted offers from retail businesses. An additional 21.7 percent of consumers never redeem the vouchers they purchase from the sites, and 26.6 percent of businesses report losing money as a result of the deals. “Our results from three studies and close to 500 businesses surveyed show that the deals are nowhere close to the rates of financial success for participating businesses that some companies claim to be having,” says Rice University associate professor of management Utpal Dholakia. On the positive side, some might argue, 80 percent of the deal users are new customers — so the 19.9-percent return rate could be viewed in a more favorable light.

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