Online vouchers have emerged as a new force in the prepaid market, combining elements of traditional coupons and gift cards with the reach of digital commerce. Social buying platforms such as Groupon and LivingSocial demonstrated the potential of the model by attracting large numbers of consumers with deeply discounted offers from major merchants.
High-profile promotions involving companies such as Gap and Amazon showed how quickly online vouchers could generate consumer interest and significant sales volume. As group buying platforms continue to connect merchants with large digital audiences, vouchers represent another prepaid option that businesses must consider when developing their promotional and customer acquisition strategies.
F. Scott Fitzgerald once said that there are no second acts in American lives, but the voucher business may be proving him wrong. For a time, it seemed as though vouchers would be replaced by gift cards and other forms of electronic payments. The rise of social buying businesses like Groupon and LivingSocial, however, has brought the voucher back onto the scene using 21st-century technology.
Two big deals, one from each of the companies mentioned above, have commentators speculating about the power and value of group buying for companies and consumers. In August 2010, Groupon sold 441,000 vouchers for Gap Inc. that let consumers pay $25 for $50 worth of apparel and accessories. In January, LivingSocial sold $20 Amazon.com gift cards for $10, reportedly selling 1.3 million deals in 24 hours and bringing in over $13 million in revenue.
Groupon recently turned down a $6 billion offer from Google. LivingSocial received a $175 million investment from Amazon, the company revealed in a Dec. 2 press release. In the release, LivingSocial stated that it had more than 10 million subscribers from the United States, Canada, the United Kingdom, Ireland, and Australia, and that it expects to bring in more than $500 million in revenue in 2011.
All of this points to a new player in the prepaid space – online vouchers. These lie somewhere along the spectrum between coupons and gift cards, but they will be a growing segment and one that merchants will need to plan for and figure out their strategy towards.
The growth of online vouchers demonstrates how digital technology can breathe new life into an established promotional model. Rather than disappearing as gift cards and electronic payments expanded, vouchers evolved into a digital product capable of reaching large groups of consumers quickly.
For merchants, the rise of social buying platforms creates both opportunities and strategic considerations. Online vouchers can attract customers and generate substantial sales volume, but businesses must determine how these promotions fit within their broader prepaid and marketing strategies. As digital commerce evolves, vouchers could continue to occupy a distinctive position between traditional coupons and gift cards.
