Over the past few years there hasn’t been a much hotter sector than coupon sites.
Last week we told you the Coupons.com just raised $200 Million giving it a billion dollar valuation and we all know Groupon.com turned down billions from Google to go public later this year, and those are only 2 of many sites dedicated to coupon type offers.
However we are in the worse recession since the great depression and some stats I have been looking at would indicate that when the economy recovers (whenever that will be) people’s use of coupons might greatly decline.
Here are some stories that indicate coupons are tied to the overall economy.
The recession prompted consumers to turn to coupons more in 2009 than they did the year before, the first increase in 17 years, according to a new study.
“While the tight economy truly sucks, we’re seeing one big advantage: Many consumers have returned to the frugal ways our grandparents used during the Great Depression. Such practices as re-using plastic bags, limiting or abandoning credit card use, and using coupons to stretch our budgets have become ingrained.”
“In fact, coupon use has grown so monumentally the statistics for 2009 are staggering.
- Coupon use grew to 29 percent, the first annual increase seen since 1992.
- More than 3.3 billion coupons were redeemed in 2009, for a total savings of $858 million.
- Nearly 30 percent of people surveyed by Promo P&I Newsletter in 2009 said they made a special trip to a store to use a coupon.
This trend started in October of 2008 — coinciding with news of the U.S. financial crisis — and led to 15 months of double-digit growth. “””
Lets look back to reports before the recession from 2006 from Couponing.com
“”CMS.com announced that over $331 billion dollars in potential consumer savings were distributed through coupons in 2006 with over 2.6 billion redeemed. This was a decline in both distribution (-12%) and redemption (-13%) from the past year.”
From 2005:
“What is interesting is that the consumer response to coupon promotions fell 6% in 2005 compared to 2004.”
“Consumers redeemed 3 billion coupons compared to 3.2 billion in 2004. ”
According to a study people even admit they use coupons much more during a recession:
“”A recent US consumer survey by ICOM Information & Communications LP, a Toronto-based marketing consultant and targeted coupon distributor, found that 67% of consumers say they are more likely to redeem a coupon during a recession.”
“Of the 1,529 US consumers participating in the survey, 45 percent said they were much more likely to use more coupons in a recessionary period, and 22 percent said they were somewhat more likely.”
“During the 2001 economic downturn, ICOM’s tracking also showed a significant increase in the number of coupons consumers redeemed each week.”
A” recent US study conducted by Prospectiv of Wakefield, Mass, polled 1,386 consumers and found that 72% are using more coupons than they did six months ago. ”
“Three-quarters of these respondents claimed the economy made them do it. ”
So as the economy improves will coupon usage start declining once again?
And if so the coupon craze might just start dying off just when the economy starts picking up steam.
What are your thoughts?
I think people will always look for great deals now matter how good their economy is. Maybe not as much as they do now, but I do believe the best of these sites are here to stay.
Good piece.
If you factor-in the massive international audience of consumers, this trend is likely to increase…and increase still-more.
There are plenty of cultures where deal-making and negotiation skills are taught early-on — and recessionary environments only exacerbate such behaviors.
And now all of these coupon sites have made it that-much-easier for folks to do what they would otherwise do, anyway, i.e., look to save money.
The economy will not recover for years and it will never be like it was before, how can it?
Most countries are up to their eyeballs in debt and the whole concept of “money” is being challenged. At the moment its based on a promise that most people cannot seem back up. The West has been unsustainable for 20+ years and now its time to pay the piper.
The only thing that is ahead for the majority is cuts, coupons or a new world currency 😉
Coupons are here to stay !
A: no, becasue, a discount, always is welcome, especially if it’s a BIG discount, also, people will remember the last years’ economy crisis, then, they will still want to save as much money as possible
I don’t think it’s going away anytime soon – the entire way that people search and sign up for coupons has become much more interactive, and with the rise of mobile payments, it’s going to be that much easier to apply discounts. People aren’t just being frugal – it’s tied into their social networks.
It’s funny, I have a coupon .com I posted on the boards for feedback in 2009, and several people said it was worthless. Glad I didn’t listen to them.
Groupon is basically a loan shark to businesses. The big difference is this shark wears lipstick and it’s interest rates have doubled.
Without major fundamental shift/change in the focus of our federal lawmakers and how we do business (and incent businesses and business owners) in the States, our economy is unfortunately going to be bad for the next 5 – 10 years. If by some miracle this guy gets re-elected then we may never recover. Groupon loves them some Obama.
the double digit growth will probably retract, but for anyone interested in this type of business, does that matter?
coupons (more generally direct mail or now direct marketing) have been a sustainable business for a long time. consult the history of the commercial airline industry for a fascinating look at how direct mail (“junk mail”) came into being. this legacy lives on in direct to consumer email (“spam”).
email has always been more effective than any other form of web marketing. spam dwarfs all other forms of email by an incredible margin. some people fight it, others find ways to get people to opt-in.
anyone can stop visiting a website. but no one can stop checking their email for the same reason no one could stop checking their regular mail- it might contain something important.
groupon is email. maybe with a twist, but it’s still just email. it’s opt-in spam. if they can’t send out the emails, the business fails to be effective.
statistics show income distribution in most countries follows a curve that does not change drastically over time. the recession may have temporarily made the coupon market a little bigger, but that market will still exist when the economy picks up.
the reason accredited investors love these “e-coupon” businesses is probably because they know from over a decade of market research that email is effective.
no matter what the state of the economy, coupons and other forms of opt-in spam will remain solid businesses. junk mail will keep flowing, whether in paper or electronic form.
maybe some trees will be spared as we transition away from circulars and envelopes full of coupons in your mailbox, but we’ll have keep the datacenters powered somehow.
You can also get discount coupons for many online retailers.
Coupons is the new currency and will be used worldwide.
@Coupon Corner,
Very, very nice domain. I’d value CouponCorner.com at $125K+
Good luck.
Couponing is a learned behavior; Once you acquire the mindset of not overpaying, it stays with you for life. For some decades coupons have been seen as “cheap” in this culture, even still to some extent on the West Coast, and in spite of that it has been a hugely attractive marketplace for consumer packaged goods companies. Surveys such as those referenced in this op-ed are highly suggestive of a specific response and thus they create a false dichotomy of the business. If I can save 30-40% off my grocery bill on a consistent basis through the services of Coupons.com with its Safeway Just4U product, why wouldn’t I? How is that any less satisfying than saving 30-40% off a house, a car, a tv, a computer, or a cell phone?
I may be biased, but I don’t see this business going away anytime soon. We will see more consolidation for sure, but people love a good deal and that won’t change.
If the last 2 weeks of ‘coupon’ domain sales are any indication, it would seem coupon-related domains are one of the hottest domain sales categories currently.
~~ sold between May 27 – June 16 ~~
Coupon(.)biz – €1,667
MiamiCoupons(.)com – $550
OnlineCoupon(.)net – $3,100
VirtualCoupon(.)com – $1,900
ExtremeCoupon(.)com – $8,900
Steve