At least one major player in the shrinking group buying market has taken another swing at staying relevant, with LivingSocial partnering with Nissan in what is the country’s first daily deal for a car.
The practice of partnering with unusually expensive offers is common among group buying businesses, but LivingSocial has been undergoing a restructure – the Nissan deal is surely a boost to get back on top.
One retail expert has told SmartCompany the partnership is merely a cross-promotional arrangement.
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Commencing on August 7, Nissan announced earlier this week three deals will be offered through Living Social where users can buy for $1 a voucher for 40% off the recommended retail price of the Nissan Almera Ti.
Despite a surge in growth when the group-buying industry kicked off, it has recently been struggling with increased pressure on margins. The sector has been undergoing a period of consolidation where a number of the small players have been forced out.
Last year, the business confirmed it cut 24 jobs from its local office.
Telsyte’s Australian Online Group Buying Study found the industry grew only slightly in 2012, up 1.4% to $504 million.
Retail Doctor Group chief executive Brian Walker told SmartCompany the partnership is a cross-promotional arrangement – “no more and no less”.
“It’s probable Nissan will get more inquires and extend its brand awareness, which its hoping will convert to sales.”
Walker says the fact Nissan has partnered with a group buying site is of little importance and it’s similar to brands offering special one day discounts to generate excitement and publicity for the brand.
“It’s a bit like when Jetstar do their Friday frenzy, it has a rush online.
“This is a promotional activity designed to stimulate consumer interest in both Nissan and LivingSocial,” he says.
Nissan Motor Company Australia chief executive William Peffer Jr said in a statement the brand is always on the lookout for “innovative ways to offer our products”, while LivingSocial said it was selected because of its “past experience developing marketing campaigns for tier-one brands”.
Walker says in forming this partnership Nissan will have considered the demographic of the “typical” LivingSocial, including factors such as age and income, and determined whether or not this matches its target market.
“LivingSocial call themselves group buying, but I see them as cross-promotional offers which are about stimulating sales. You’ll probably find LivingSocial get some money in the background for each lead the promotion generates.”
“For Nissan, its three cars out of many thousands they produce and this is a direct marketing expense. If it stimulates interest from others into the brand then it’s for them, they would have a number of cars allocated to give away in promotions and this is probably part of that,” he says.
Walker says if Nissan receive thousands of inquiries the company will be ahead, but he says higher-end brands tend not to participate in promotional activities on group-buying sites such as LivingSocial.
“You don’t see the Burberry, Armani or Porsches of this world doing this… I don’t think it enhances the value of the brand, but for a short-term promotional activity it’s quite good,” he says.