Mirror, Mirror: Have they got a deal for you!
Websites proliferate offering bargains at boutique businesses.
Rachel Wenk probably never would have set foot in Bernard's Salon and Day Spa in Cherry Hill if she hadn't snagged such a sweet online deal.
But earlier this month, the 23-year-old university admissions rep treated herself to an hour massage and a facial. The experience was valued at more than $135, but she paid just $60.
Three cheers for Groupon.com - a moniker blending group and coupon, and one of a growing number of high-tech ways to score local deals.
"I love it," said Wenk, who through Chicago-based Groupon also has purchased $40 worth of food at Phoebe's Bar-B-Q on South Street for $20, and $30 of hot yoga classes worth $60 at Bikram Yoga in Voorhees. "I get a good deal every time."
Deal-of-the-day websites are changing the way we spend our discretionary funds - especially when it comes to food and fashion (definitely two of my favorite things).
After all, it's difficult to resist a neighborhood deal when it lands in your e-mail inbox or vibrates your smartphone first thing in the morning. Just this month, three more group shopping sites - MyDailyThread.com, Eversave.com, and Buywithme.com - were expanded to include Philly, so local shoppers are now very blessed with bargains.
Here is how the websites generally operate:
First, online entrepreneurs hire consultants familiar with local markets to work with smaller, hipper businesses including edgy salons, off-the-beaten path boutiques, and trendy BYOBs, and create discounted deals. These are the kinds of places city dwellers rave about, but many people often can't afford.
Then, those deals - official only after a quota, or "tipping point" is met - are offered in a regular e-mail to registered customers. When the buying spree closes, usually after a day to a week, the website takes a piece of the profit, ranging from 30 to 50 percent.
Take Friday's Groupon.com deal for Philadelphia-based shoppers: $30 worth of gourmet chocolate at Max Brenner on Walnut Street for $15 - if 50 people purchased.
The goal was met by 6:44 a.m. that day (the final count was more than 860 takers). Chocolate lovers have the next six months to claim their sugary slice of heaven, and Groupon got about half the profit.
"The Internet makes group buying a lot cheaper, a lot easier, and a lot more efficient," said Scott Testa, a professor of business administration at Cabrini College in Radnor. "And with the economy forcing people to be frugal, these sites are great because they offer people opportunities they may not have otherwise had."
Businesses may not experience an immediate economic gain with each discount offered. After all, they often are slashing prices 50 percent, plus they have to pay the group shopping site its share. But these companies, often with advertising budgets ranging from tiny to nonexistent, get exposure - the websites new to Philly this month each have a mailing list of at least 10,000 people.
Also, experience with the group shopping sites has taught more established businesses the importance of social media.
Anthony Rossano, owner of Bernard's spa, was amazed three months ago when he put his $60 massage and facial deal on Groupon.
"When I woke up that morning, already 278 people had bought the deal; then later in the day it was 718. By the end of the day, I had 1,268 purchases," Rossano said. "It was crazy. Groupon drove more than 40,000 hits to my website. I was shocked."
But he added, "It's not like I'm going to make a lot of money. The whole point is to give the customers a wonderful experience so they come back again."
Groupon, which started offering deals in Chicago less than two years ago and in Philadelphia in September, is worth $1.3 billion today, with 6 million subscribers in 68 cities and 18 countries. According to Groupon, it has saved customers $230 million. Groupon would not discuss sales numbers.
Since the 2008 launch of Groupon - which many consider the leader in online group shopping - hundreds of similar sites have started, said Techcrunch.com writer Leena Rao, who follows the trend. That includes Livingsocial.com - it offers its deals on Facebook - which expanded to Philadelphia six weeks ago with more than $40 million in venture capital, according to founder Tim O'Shaughnessy.
"This is the space of the moment," Rao said. "The market is far from saturated, and people are going to start to diversify into niche deals."
We are seeing that already.
New York-based Cinderellawine.com offers two wine deals a day.
Also out of New York, Buywithme.com is geared toward women. It expanded two weeks ago to Philadelphia, its fifth market.
Jeremy Berman and Daniel Kaplan launched MyDailyThread.com in Atlanta but expanded this month to Philadelphia with the help of local fashion insider Jennifer Ramsey, formerly of Echochic boutique.
MyDailyThread.com blends elements of Groupon and Daily Candy - an online lifestyle guidebook of sorts - to create a hub for hipsters. It launched in Philly with an iPad contest and deals at Las Cazuelas on Girard Avenue and Spa East in Northern Liberties. The three-year-old two.one.five magazine is writing the content.
"We sort of want to be the Zagats of the industry," Berman said. "We are looking at running deals with a lot of high-fashion places like Ursula's AboutPhace and Matthew Izzo."
If you are listening, Matthew Izzo, I'll be watching for your deal. Hint: I'd prefer one of those GAR-DE leather jackets.