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Chances are you've heard of Vente-privee. The French company pioneered the booming online private sales market. And you might be familiar with Groupon, a prominent player in the increasingly hot local deal-of-the-day market.

The former sells high-end luxury products. The latter offers recipients of its emails the possibility of being able to buy products and services from local businesses at hefty discounts. What's the secret to their success? You might be inclined to say "It's the deals!" While that's partially correct, the real answer is something far more primal: urgency.

Vente-privee, Groupon and their competitors are examples of online businesses that have found effective ways to bring impulse buying to the web.

In the case of Vente-privee, sales of discounted luxury products are fleeting; members are alerted to upcoming sales and those sales don't last more than a few days. That means that members have to act quickly to snatch up the deals. In the case of Groupon, members receive an email each day with a special offer from a local business. Enough Groupon members have to agree to take part in the offer for it to be realized.

In both cases, members of Vente-privee and Groupon aren't just taking advantage of great deals. There are plenty of places to find those -- from online coupon hubs to cashback sites. What is really driving the success of companies like Ventee-privee and Groupon is that those deals are fleeting. Members have a sense of urgency. They're forced to act quickly because if they don't, they know they'll lose out.

In my opinion, the importance of urgency can't be understated online. The internet by its very nature often encourages consumers to be more cautious and analytical than they are offline. The internet is the perfect medium for research, and thanks to the competitive world of online retail where retailers come up with sales for just about every holiday, consumers who bet that they'll be able to get something cheaper from somewhere else if they hold out a little bit longer are often right.

Companies like Vente-privee and Groupon neutralize some of the factors that make it so hard for online retailers to create the sense of urgency that leads to impulse buying. In effect, they turn the table on consumers. Sure they're offering a good deal, but it's also about the experience. When a consumer takes advantage of a limited time offer, he or she usually comes away thinking positively about the purchase. After all, the offer wasn't going to last forever, and those who weren't in-the-know didn't get to take advantage of it. This is the shopping equivalent of an adrenaline rush, and it's a good ego booster to boot.

Obviously, not every company can adopt a business model like Vente-privee or Groupon, but I think there are a few lessons other businesses can learn from them:

  • Urgency is created with well-crafted calls to action. "Buy this Prada handbag within the next two days and you'll save $300!" That's essentially Vente-privee's proposition to its members. It's also a call-to-action with an urgent deadline. Far too often, businesses focus on creating calls to action without giving thought to how a time element can make them much more compelling.
  • Email is a great way to deliver those calls to action. It's no surprise that services like Vente-privee and Groupon keep their members informed by email. When it comes to delivering time-sensitive calls to action, email is a great choice, although there's plenty of room for experimentation on Facebook and Twitter too.
  • Make a purchase an exciting experience. Even if you're not offering your product or service at 75% off, there are plenty of ways to ensure that a customer walks away feeling like he or she is special. One example: a promotion in which customers who make a purchase within the next six hours receive a random coupon offering a discount of 10-25% off of their next purchase.

While the markets that Vente-privee and Groupon are burning up only have so much room, there's more than enough opportunity to apply some of the secrets of their success to businesses of all kinds.

Patricio Robles

Published 3 February, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2429 more posts from this author

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Pascal Inderabudhi

Excellent summary. I would like to add that the same purchasing urgency comes to mind with BigDeal.com, a real-time auction site that offers (mostly) electronic items at greatly reduced prices.

Members purchase a number of bids (at 75 cents ea) to spend on items auctioned, with each bid raising the price by 15 cents. More importantly, items up for auction have a countdown timer, which each bid adding time to the countdown - last bid standing when time elapses wins the product.

While the bidding and auction system is not perfect (WSJ dropped their support of the brand due to this), it does tap into the urgency and exclusivity of Vente-privee and Groupon's models. By setting each product to a specific time with realtime countdown timer and auctions, BigDeal is selling an exciting, competitive experience with time and urgency in the members' hands.

*I do not work for BigDeal, this is not a promotion for the company, I have used the site and think it parallels what's detailed here.

almost 7 years ago

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Deri Jones, CEO at SciVisum Ltd

Not sure what the take away from this is?

Isn't it just the usual __Loss Leader / Offer Ends Tuesday__ kind of deal?

The difference being I guess, is that those 2 sites sell exclusively this way: they only have time-limited deals.

Your common or garden  retailer with zillions of products on offer, already do have 'offer of the week' emails don't they?  Eg ebuyer.com - I get their weekly offers email.

Also, not sure I understood the 'customer walks away feeling like he or she is special' idea.

It doesn't sound like 'special' if they "receive a random coupon"

Deri

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almost 7 years ago

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Robert Farago

It's a scam.

1. They often promise discounts that ARE available elsewhere.

2. They make you think there's a chance the discount WON'T be on offer. It will.

3. When a discount IS real, the response can be so great that it's impossible to receive the good or service (i.e. they oversell availability) before . . .

4. The discounts expire. Again, you could well be paying for something you don't receive.

5. The sites depend on viral advertising. In that sense, it's a bit of a Ponzi scheme.

Even if this analysis is a bit harsh, the bottom line is that the sites are not consistently delivering real value. "False urgency" ultimately alienates people. Especially when it's constant.

almost 7 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy

Deri,

What's the problem with "Offer Ends Tuesday" deals? Those can create urgency too. That's the point.

Obviously, some offers are more compelling and urgent than others. If you look at Vente-privee and Groupon, it's easy to see that they have structured themselves to make a more powerful proposition to the consumer. For one, the discounts tend to be much steeper, and they don't last as long. And because they're more focused, there are fewer of them. With Groupon, there's only one deal a day per city.

As for my example, a person who makes the purchase within the next six hours is receiving a coupon that someone who doesn't purchase within the next six hours isn't. So you come away feeling like you got something somebody who wasn't clued in didn't.

Robert,

Sorry, but I disagree. When you use the word 'scam', you're implying some sort of fraud and neither of these services is engaged in fraud.

1. The discounts at Vente-Privee and Groupon are often in the range of 50-70% and 50-90%, respectively. That's certainly not bad but more importantly, neither of these sites makes the claim that you can never find similar discounts elsewhere at some time.

2. I'm not sure what you're trying to say here. Taking the Groupon deal for New York that's on display as I write this, do you really think if you walk into Grandaisy Bakery and ask to buy $15 worth of food for $7, they're going to give it to you if you simply ask nicely?

3. That's nonsense. Can you point to any example where Vente-Privee or Groupon 'oversold' something? Vente-Privee, like most online retailers, keeps track of inventory and displays when at item goes out of stock (and prevents you from buying it). And on Groupon, you are printing a voucher to redeem what you've purchased in person. Ironically, Groupon and its advertisers want as many people as possible to buy; the daily deal doesn't become a reality until the advertiser gets a certain number of commitments making it worth its while!

4. Again, this is nonsense. Have you even looked at how these services operate? The prices are clearly listed and after the sale or daily deal expires, you can't attempt a purchase. And again, on Vente-Privee, products that go out of stock cannot be purchased.

5. How is either of these services a Ponzi scheme? In a Ponzi scheme, new money coming in is used to pay off old money that has been promised a return. There's nothing of the sort here. The way these sites have been structured incentivizes members to invite friends, but everyone is paying for what they buy.

Finally, I'll say this: Vente-Privee is reportedly earning more than $500m in revenue a year and generating more than 20,000 orders a day. It has been in business since 2001. Groupon is reportedly expecting to hit $100m in revenue this year. If these services are such an obvious scam and people aren't getting what they're promised, why do so many people sing their praises and why are they doing so well?

almost 7 years ago

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Kris

Beware of groupon scams!   Groupon doesn't vet the businesses.   They go by word of the business over the phone.    St. Louis just had an offer for $99 for 6 laser hair removal treatments by a med spa.   The guy running the spa has only been in the business for 4 months, claims he is a physician's assistant (he holds no license in Missouri) and showcased a top notch laser system that he doesn't even own!    2,000 packages were sold...that's 12,000 treatments!!   The guy made off with $100,000 in 24 hours.   Groupies had to make a quick decision on this one.    He'll likely file bankruptcy and make off with the cool cash.

over 6 years ago

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Dajo

Its not just the merchants that Groupon takes on that are dodgy, Groupon itself is engaged in shady marketing tactics and misrepresentations on their site to mislead customers into buying deals!

We all know that deals last for 24 hours, and in London at least, they start at midnight. However, I've noticed that for two nights in a row, barely 15-30 seconds after the new deal has started, there were already 3 buys!

It takes longer than that to read the description, let alone go through the checkout process.

I've taken a screenshot so that there's evidence, and I'll keep taking screenshots in the days ahead to compile a case against Groupon:

Screenshot: http://www.londondailydeals.co.uk/wp-content/uploads/2010/07/Groupon-Scam.jpg

My writeup: http://www.londondailydeals.co.uk/group-buying-deals/groupon-misleading-and-deceiving-potential-customers-scam/

over 6 years ago

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Ej

I think Vente-Prive is shady - it charges your credit card immediately and delivers weeks later, or claims the vendor failed to deliver etc and tries to switch the item to a different one, or comes up with some other excuse for the failure to perform as promised.

almost 4 years ago

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