Rue La La Sees Staff Cut Backs – Plans to Outsource Sales Force

Here we are less than two weeks into the New Year and the daily deals industry continues to show signs that 2012 may be the year that we see many deal providers throwing in the towel or at least making some significant cutbacks. The Boston Globe reports that Rue La La, a members-only flash sales site that launched in 2008, laid off 65 of its 550 employees on Thursday and will be outsourcing its sales force with an as yet unnamed company.

Rue La La’s parent company, Retail Convergence Inc will also be closing down another site, SmartBargains and merging it into Rue La La.

The Globe goes on to say, “Rue La La had been a drag on the earnings of its previous parent company, GSI Commerce, a division of eBay Inc. GSI bought Rue La La in 2009 in a deal valued at $350 million but in 2011 spun off Rue La La as a private company, with eBay retaining 30 percent ownership.”

Rue La La remains optimistic and in a statement said it has seen ‘‘dramatic growth with nearly $300 million in sales in 2011 and similar growth planned for 2012 and beyond.’’

Daily Deal Media reported on Rue La La last May when it was preparing to launch its daily deal site, Rue Local. At that time Mark McWeeny, Rue Local president said, “Our customers are very different from the coupon-clipping customer that frequents Groupon. They spend more than the average ticket, tell all their friends and they come back.”

It seems like something in that statement didn’t work out quite right.

 Source: The Boston Globe

Who and What Drives the “Luxury” Trade in North America?

The current market scenario in North America may be of concern to many, especially those who run the ‘luxury trade’. However, they may like to know that every one in three American ‘consumers’ seems to have made one purchase in last six months which fits the “luxury” label as per a survey conducted by Empathica. The next obvious question is how do you define ‘luxury’?

Luxury can be a need for some, ‘a way of life’ and for some it may be an aspiration. The perception of luxury’ varies with the income group and gender. However the cost of luxury as per the survey is more gender skewed than one would possibly imagine. The survey reveals that women are much easier to please than men. For most women, luxury begins at $100 and ends at $ 500. However, if you are a lady wanting to gift a ‘luxury’ product to a man, please note that men do not consider anything luxurious if it is under $1000. However, if like most people you are buying for yourself, you don’t buy on impulse and purchase only after careful consideration, the survey reveals.

Merchants who have pinned their hopes on online selling should be aware of the fact that ‘online purchasing of luxury goods’ is not yet the dominant trend. It would also help to know that although Americans are more forthcoming for an online purchase, a vast majority of the Canadians (70%) believe in in-store, touch and feel shopping.

‘Pastures on the other side are greener’ fits the bill when it comes to describing ‘perception of wealth’ by consumers. Those who are perceived as ‘wealthy’ have to earn at least a 100,000 USD per annum by those who earn 50,000 USD to 60,000 USD. If you ask the one’s earning 100,000 USD if they are wealthy, very few will agree. As for majority, the milestone of wealth then begins at 250,000 USD. Obviously the milestone of wealth keeps shifting.

Empathica is a customer experience management company based in Canada and US, the survey is a part of their Consumer Insight Panel.

Source: PRWeb

Daily Dealer Travelzoo Sees a Marked Improvement in Billings – Competition Intensifies

Improved billings – lack of loyalty – increased competition

November numbers are in for Travelzoo (NASDAQ ticker symbol: TZOO) and the company registered a solid 44% growth in local deals gross billings. This is a significant increase over October billings and places the company in third position trailing only Groupon and LivingSocial in terms of dollar gross billings for the month.

The TREFIS article states that they believe “a major threat to Travelzoo Local Deals is that its business model is very easy to replicate. This has spawned a large number of deal-based clone sites that provide similar discounts to subscribers.” The article also sources the Susquehanna/Yipit survey. In a nutshell, that survey stated that “businesses that have offered an online deal-of-the-day in the past aren’t planning to do so again in the next six months due to concerns on low rates of repeat business from new customers.”

It’s really the same argument that has been verbalized ad nausea. Low barriers of entry, more competition, and lack of customer loyalty…yada yada yada. Travelzoo is not stupid. They went into the deal space with their eyes open. The company continues to differentiate itself by leveraging its existing relationships with hotels to offer high-end deals. It also relies on its other travel-advertising and search products to boost volumes for its local deals segment.

Travelzoo continues to expand its local deal offers via the ‘Getaways’ business model. That platform produces a larger amount of revenue as the ticket items are typically much larger. Travelzoo contends that its approach to daily dealing is very difficult to replicate owing to its rigorous deal quality standards. We have touched on this in several Daily Deal Media posts how important quality standards are.

The TREFIS post re-iterates how competitive the social buying space has become. The article estimates that there are over 200 social buying site clones in the U.S. alone and over 500 worldwide. I think those numbers are way off. Our sources show somewhere between 400 and 600 U.S. sites and literally thousands world wide.

There is always the possibility of eroding take rates (percentage of gross revenue kept by group-buying platforms). Daily dealer Kgbdeals charges 15% from merchants verses the 40% charged by Travelzoo. Competitive pressures like those could lead to a decline in take rates charged by Travelzoo over time. In the meantime, the growth rate of this portion of Travelzoo’s business model continues to be stellar. I am looking forward to their December numbers as well as 2012.

Source: Trefis

 

 

 

European Commission Vows to Boost eCommerce by Removing its Barriers

Editor’s note: The following is a guest post by Michael Essany.

On Thursday, the eCommerce industry awoke to news of the European Commission’s plan to double the share of eCommerce in retail sales – a move that would simultaneously increase the role of the internet sector in Europe’s GDP.

The European Commission, which serves as the powerful executive body of the European Union, is largely responsible for proposing legislation, implementing decisions, and running the day-to-day operations of the European Union.

At a time when great economic headwinds persist across Europe, any proactive efforts to advance the EU’s economic strength while driving job growth are widely viewed as positive steps among the European population. As a result, the body certainly has the political leverage and governmentalauthority to carry out its freshly unveiled and highly ambitious plan.

Government Backed Growth Assured

This week, the European Union presented to the public a 16-point plan that will aggressively promote eCommerce in the 27-nation economic union.

“In the difficult circumstances facing Europe we must seize every source of activity and new jobs as a matter of urgency,” said EC members in a public statement. “The action plan we are presenting today will create new opportunities for citizens and businesses and will bring Europe much-needed growth and employment.”

The European Commission’s so-called “action plan” is intended to double the volume of eCcommerce in Europe within three years. According to the EC, the internet economy now creates an estimated 2.6 jobs for every “offline job” lost today.

The proposed steps, however, primarily deal with overcoming present obstacles to cross-border online purchasing. Citing a 2009 study, the Commission says that although more than 50% of EU retailers are selling to consumers online, only 21% receive orders from online shoppers in other countries.

Details made public Thursday also show that the Commission is making it a high priority to finally address the longstanding need to deploy high-speed networks and advanced technological solutions across the European Union.

The full proposal to the European Parliament can be read here.

Economic Hopes Pinned to eCommerce

In the big picture, European Commissioners Michel Barnier, NeelieKroes, and John Dali believe that their robuste Commerce initiative will spark new opportunities for citizens and businesses as Europe continues to recover from and resist further economic calamities. 

“Each year,” Kroesreveals, “200 million Europeans – 40% of all citizens – buy over the internet. But faced with different national rules and systems, less than one quarter of that number do so across national borders.”

With vast economic hopes underpinning the proposed plan of action, Europe’s lawmakers vow to be resolute in their aims to insure that Europeans don’t fall behind the rest of the world where eCommerce is already boosting both economies and job growth at a significant and perpetually accelerating pace.

“If 15% of retail sales were eCommerce and the obstacles to the internal market were removed,” the EC claims, “the gains for consumers might be as much as 204 billion euros (US $259.2 billion), or 1.7% of European GDP.”

Source: European Commission