Abstract
Daily deals are nowadays very popular. As a new form of marketing, they allow local small businesses to sell vouchers at substantial price discounts for a very limited period of time. However, it is unclear whether and to what extent a seller’s online reputation affects the outcomes of its daily deal promotions. This paper presents an analysis of 4060 daily deals scraped from Groupon. The empirical results suggest that (1) business reputation, measured by displayed average rating, is positively associated with the sales of vouchers; (2) business reputation has no significant relationship with voucher discount depth; (3) business reputation is positively associated with the increase of customer traffic following a daily deal promotion; and (4) ratings displayed on daily deal sites are more influential than ratings displayed on third-party review sites. These findings extend our understanding of daily deals and provide concrete guidance to merchants regarding how to attract more purchases and traffic through online deals as well as to platform owners by pointing out the value of reputation in moderating consumers’ and merchants’ behaviors.
Highlights
IntroductionGroupon is the biggest daily deal website nowadays
Groupon provides a very good environment for researchers to study the effects of reputation on voucher sales and prices
Online reputation is positively associated with the sales of vouchers
Summary
Groupon is the biggest daily deal website nowadays. Founded in 2008, Groupon provides deals covering a wide range from theater tickets and city passes to restaurant meals and Yoga classes. The author focuses on daily deals in the restaurant category, which is one of the most popular categories on Groupon. Groupon provides a very good environment for researchers to study the effects of reputation on voucher sales and prices. The author can accurately collect the needed variables (e.g., voucher sales, average customer ratings, and discount depth), so that the effects could be quantified precisely. When consumers browse the webpages, they can see the characteristics of the deal, the restaurant name, face value of the voucher, discounted price, and the Groupon rating of the restaurant, which may potentially influence their decisions to buy the deal
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