Is Group Buying/Daily Deals dead? Definitely not....

Anyone who knows me knows that I am a big fan of group buying websites. I work with alot of them and we use alot of them...who doesn't love a good deal??

Recently there has been tons of speculation about the demise of this industry and from a professional perspective I don't see that being the case because of the rise in volume that these websites process.

I came across this great article which I think will put alot of things into perspective. Although its about Groupon and their IPO, I think it can apply to many of the larger daily deal websites.

Enjoy - Group Deals Are Dead, So Who Will Buy Groupon’s Stock?

DDDD (Daily Deal Dynamic Descriptor) helps reduce chargebacks and customer service overhead

At Social App Merchant we are always looking at new ways to leverage technology to improve the way our customers operate their business. Daily Deal websites are a big part of our business, and although the industry is in its infancy, we are definitely one of the payment service providers who have quite a lot of experience in dealing with these clients. In previous articles I discussed if Daily Deal websites are high risk, I don't believe they are and that is because I know what the best practices are for ensuring chargebacks are kept in check. And, with all my clients in this space I like to work with them to ensure they are in compliance with these best practices as its beneficial to everyone.

Back to how to leverage technology, we have introduced functionality that allows a daily deal website to pass through name of an actual deal to appear on the credit card statement descriptor, and not just the deal site and customer service phone #.


A merchant descriptor looks something like this:

DAILYDEALSITE

Dynamic descriptor gives the merchant the ability to control the descriptor on the credit card statement of the customer. Adapting this feature to our previous example, we get:

DAILYDEAL*GreenSpa

The “GreenSpa” would be information that the Daily Deal website would be passing with the transaction .

As Daily Deal websites grow in popularity, we are seeing that consumers are making many purchases at the same deal site on a monthly basis. They may see three charges from the same site but may not remember they made those three purchases. Also, they could have purchased several deals across two or more daily deal websites. By implementing daily deal dynamic descriptor (or DDDD - I like that!) functionality, your customers will know exactly what each charge is for. This will reduce the number of call center and email inquiries you receiver as well as reduce chargebacks.

If you are a Daily Deal website and would like to learn more about this, contact me! If you are looking for a processing solutions, we can definitely help there. Take a a look at www.socialappmerchant.com for information

JR

My new home - Patricia Weber Consulting!

I would like to take this opportunity to let everyone know that I have joined Patricia Weber Consulting as VP High Risk Merchant Management. I have known and worked with Patricia in the past and I am extremely excited about this opportunity. My main goal is to work with Internet Marketers to find the best possible credit card processing solution/s available to them. This is what I have done for the past few years and its what I love doing. Internet Marketers are by far the most innovative and fun group of people to work with. Some of the things I will be doing are:

- Setup merchant accounts and banking relationship for online marketers who fall into a higher risk category.
- Manage merchant account relationships acting as an advocate on behalf of their business
- Assist with expansion into the global marketplace
- Implement best practices to improve the customer experience.
- Recommend tools to reduce fraud and increase conversions.
- Prepare and execute a chargeback reduction plan
- Help high volume merchants spread volume across multiple banks to reduce the risk of their account being terminated without having any back up processing in place.
- Work with high volume merchants to increase their processing bandwith by setting up accounts with either no cap, or multiple accounts.
- Work with merchants to manage their accounts, monitor chargebacks and ensure processing uptime.
- Offshore company formation (when needed)

You can read more about our services here - www.patriciaweberconsulting.com.

In addition to our consulting, we also have another division called Social App Merchant. Social App Merchant focuses more on emerging markets and businesses that are "out of the box". As an example, we work with a lot of Daily Deal companies, mobile dating, etc etc. So, although the business might not be high risk, alot of banks don't really understand. So, we work with these merchants to find the right solutions for them.

You can read more about Social App Merchant here - www.socialappmerchant.com

I am very excited about this next stage or my career and working with Patricia. If I can help you and your business out in any way, please do not hesitate to contact me.

thanks

Jared

Are Daily Deal websites considered high risk?

Daily Deal websites are something I know quite a bit about as I work with some of the largest Daily Deal websites around. These guys process a significant amount of volume and quite honestly the chargebacks are extremely low considering the volume. So the question is, why in speaking to some companies, do they tell them that domestic processors are not willing or want to their business because it’s too high risk?

A few answers to this question.
1. They don’t understand it.
About 1 year ago, when the larger sites were just starting out, this may have been a good answer and a few of my clients had to really sit down with processors and explain the concept. If you get this answer from a processor today, then they shouldn’t be in this business. Anyone who doesn’t understand this business has been living under a rock.

2. There is a fear of high chargebacks from customers who aren’t happy with service they received.
If that is the case, then this is not a merchant that I would want to work with either. The Daily Deal websites that will succeed are the ones who place an emphasis on customer service. If a customer is not happy, then refund them. You would rather have that customer come back and be happy with the service they received, then not and of course you don’t want the chargebacks.

3. The merchant can go out of business after they sold all the deals.This is a risk that you have to take, but all these larger deal companies do their due diligence on the merchants to see if they can handle the huge influx of customers they are going to receive. I wouldn’t want to work with a deal company that will just take anyone, I will want to see their contract and how they board the merchants.

I do not in any way consider a daily deal sites high risk, as long as the people behind them are in it for the long term and are looking to build a sustainable business. Right now we are placing daily deal sites domestically at GREAT rates both in Canada in the US. For some of the larger sites we have merchant accounts at both a Canadian and US bank, and NO ISSUES AT ALL!

I strongly believe that the top guys will stay the top guys but there will be smaller sites that focus niche industries, which is definitely something we are seeing now.

As always, I am here to help if you are looking to place this business. Hit me up


JR