Bonuses and coupons: the market to shake up e-commerce – part 3/3
2011. 06. 15.
Researchers can only measure the robust competition between bonus/coupon companies, but the judges are the consumers themselves who act on the offers they find the most lucrative. In order to decide the who is the market leader question one needs numbers and analysis, i.e. we need to enumerate the possible criteria by which an answer can be found for a given time period. Part three of the joint research by GKIeNET and the E-business Research Center of Corvinus University evaluates the indices and the turnover of businesses.
Metrics that may be used in the evaluation
Owners can best measure the business acumen of a company by looking at the net, after-tax revenue at the end of the year. However, in a market going through explosive growth, it is important to consider many factors that are important indicators in addition to financial results, and those results must be considered not just from the owners’ perspective but also from the vantage point of business partners (in this case retailers). In the bonus/coupon market indicators that are suitable to use for evaluating business performance throughout the year include revenue, bonuses/coupons sold, the number of offers, the average discount size, the average amount saved and the metrics describing relationships with consumers and retailers.
Research is made more difficult by the fact that bonuses/coupons are available online for more and more cities outside Budapest since April 2011, making it necessary to track competition nationwide. Nationwide measurements, on the other hand, have started only recently, and the data show that the bonus/coupon market outside the capital is still underdeveloped. The present research summary covers the period between May 2, 2011 and May 30, 2011 at the latest, and is based exclusively on offers valid in Budapest. The figures shown here pertain to the three currently leading bonus/coupon sellers (in alphabetical order: Bónusz Brigád, Kupon Világ, Napi Tipp) as well as an „up-and-coming” business (Kuponunk).
Any analysis endeavoring to survey bonus/coupon sites will find revenue to be the most important metric.
Accordingly, in May 2011, Bónusz Brigád had revenues of 112,819,552 forints, Kupon Világ 99,463,019 forints, Napi Tipp 52,451,569 forints while Kuponunk sold 9,279,300 forints through their Budapest bonuses/coupons.
Bonus/coupon sales indicators
The number of bonuses/coupons sold refers to the number of transactions a site managed to execute. However, caution must be exercised when interpreting these figures due to several factors. The actual number of bonuses/coupons sold can be different from the figure shown on the website, for example when customers choose to pay by wire transfer but then fail to actually transfer the amount after submitting their intention to buy the products. Data assessment is particularly questionable in the case of NapiTipp.hu, where PayPal is offered as a payment option, yet the majority of customers chose to pay by wire transfer over the period of this study (for the time being, PayPal is not a widespread payment option in Hungary). If the number of paying customers falls short of the indicated number of coupons sold, revenue figures are obviously lower. The other factor that needs to be taken into consideration when interpreting the indicator of the number of coupons sold is the fact that the number of offers and the number of corresponding coupon sales (transactions) are not necessarily interrelated.
Based on aggregate data, Kupon Világ sold a total of 22,366 coupons from 71 offers, which translates into 315 coupons per offer and a price of 4,474 forints. Bónusz Brigád, on the other hand, advertised 58 deals, selling 20,069 bonuses at an average price of 5,662, with an average of 346 bonus sales per offer. Napi Tipp sold a total of 8,153 coupons for only 23 deals, while the smallest market player, Kuponunk, sold 1,152 coupons for 24 advertised deals in Budapest.
The number of offers indicator
The number of advertised deals may convey the impression of abundance, but it is not a reliable indicator in itself. First of all, it is up to the strategy of the company how many deals are displayed at a time, because attention, and even shopping propensity, may diminish when one is presented too many offers at once. Secondly, the sales teams of the bonus/coupon websites research many deals, and by now many merchants volunteer to provide offers, of which a company picks the best ones in line with its quality standards. Thirdly, as mentioned earlier, the number of advertised deals is not indicative of the weekly number of coupons sold, instead it is related more closely to the category of the offer or its uniqueness.
Based on the indicators along these lines, Kupon Világ offered the highest number of deals in May 2011, yet Bónusz Brigád proved to be more efficient, given that their sales per deal were ten percentage points more effective. This translates into an advantage of 2,000 thousand transactions if the number of offers remains fixed.
To experts the ratio of coupon sales to advertised offers indicates primarily the effectiveness of sales teams, as well as the categories to which market players orient themselves, and how they succeed with the advertised offers. From this point of view, Bónusz Brigád and Napi Tipp are much more “conscious” in picking out their offerings, and although the number of offers is smaller than at Kupon Világ, there are also fewer offers with low sales volume.
Average discount rate and savings amount indicators
The average discount rate and the corresponding savings indicators are probably the most misleading metrics in comparisons. Both are being used widely by companies for marketing purposes, despite the fact that the success of firms is only indirectly shaped by the potential boosting effect of significant money-off bargains on impulse shopping.
Based on the May data, the savings amount and the average discount rate at domestic bonus/coupon sites are as follows: 201,214,212 forints and 79% at Napi Tipp, 216,346,638 Ft and 69% at Kupon Világ 143,046,842 Ft and 56% at Bónusz Brigád, and 12,874,300 Ft and 58% at Kuponunk. Based on the indicators discussed above, however, it is obvious that these two indicators do not bear the slightest relation to revenues, the number of bonuses/coupons sold or the number of advertised offers.
Indicators measuring the relationship with customers and merchants
Assessing the relationship with customers and merchants is the most difficult task. Customer feedback can obviously be tracked by the actual number of bonuses/coupons sold (of which we have no exact data, since companies like to keep these figures hidden), but feedback posted on social media sites is particularly valuable to merchants. The number of Facebook followers indicates how many users are reached daily by the offers. In addition, the number of users registered on the site could also be a good measure (newsletters can be sent to email addresses). At the same time, the two indicators have to be treated separately, because they represent different dimensions and are not necessarily interrelated.
As of May 2011, the number of Facebook followers totaled some 185,000 people at Bónusz Brigád, 105,000 at Kupon Világ, 54,000 at Napi Tipp, and 32,000 at Kuponunk. No data are available on the number of registered users, though.
The number of Facebook likes associated with an offer can also be interpreted as an indicator, however, this is less reliable feedback, given that customers do not necessarily express their opinions about an offer. The number of likes per offer depends heavily on factors such as a description or a game related to the offer. The number of Facebook likes registered to the May offers are as follows: Kupon Világ: 5,586, Bónusz Brigád: 4,787, Napi Tipp: 1,286, Kuponunk: 718.
In addition to the above considerations, the second part of the present series pointed out that another significant factor is how much room is allowed by the owner of the bonus/coupon site to promote the brand name of the merchant. Since it comes down to visual exposure, it is virtually impossible to compare the sites by exact measurements. Therefore we trust our readers and merchants to make this assessment.
Bónusz Brigád was the market leader in May 2011
It is difficult to summarize the results measured in May 2011. The data clearly show that there are two truly dominant major participants: Bónusz Brigád, which started out as a Hungarian SME, and Kupon Világ, owned by the international Rebate Networks. Napi Tipp is also a strong contender (bear in mind that there are more than 50 companies in the Hungarian bonus/coupon market), while Kuponunk was included in the analysis to compare the results of a competitor that started later than the rest (in March 2011) but was doing business nimbly.
All factors considered, Bónusz Brigád appears to be the current market leader on the basis of Budapest offers surveyed in May 2011. The conclusion is supported by the revenue indicator, the more efficient sales per offer metric, the high number of Facebook followers and the conscious and appropriate use of advertising. Based on comprehensive interviews with the two major competitors, Bónusz Brigád has approximately one-third as many employees as Kupon Világ, meaning that their revenue per employee indicator is also much better.
Beyond the metrics measured (which we view as the sole basis for establishing market leadership) we must also emphasize that Bónusz Brigád is a leader in development, the most important factors of which are the following:
- They were the first in Hungary and the second in Europe to launch iPhone and Android apps;
- The apps not only allow the user to make a purchase but they save printing as well;
- They offer a 100% money-back guarantee;
- They were the first in Europe to introduce personalized offers in cooperation with Gravity, another Hungarian-owned business.
Many various articles are published about bonus/coupon sites. We wish to emphasize, however, that these companies have a stable business model, and that they have opened a new business channel on the internet.
GKIeNET, BCE E-business Research Center
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