There are a number of emerging websites which provide Groupon-style deals for businesses. These allow businesses to take advantage of 50%+ off sales offers provided by companies looking to expand their market. There are a few differences in the B2B daily deals market that are worth noting, in comparison to the B2C market of Groupon et al.
Longer Lead Time in B2B than B2C
The business market has a longer lead time than the consumer market and because of this, daily deals don’t work in the B2B deals space. The majority of B2B deal providers have recognised this and instead of daily deals, they promote monthly deals or quantity-restricted deals.
How Do B2B Deals Differ To B2C Deals?
We’ve seen Groupon deals being dominated significantly by the service sector and it’s not so different with B2B deals. It’s rare to find B2B products listed in any of the deal aggregators, although this is changing with the influx of SaaS. The high scalability, low-cost model of software as a service allows those companies to offer significant discounts and treat the discount as a cost-of-sale. This means you’ll see primarily services and SaaS listed in the business deal aggregators.
What cut do the business deal aggregators take?
If you haven’t heard, Groupon for consumers take 50% from any revenue generated through their daily deals. They generally look for 50% off discounts too, so the company offering the service ends up getting paid 25% of their normal ticket price. That’s great for the consumer and good for the company looking at this as a marketing exercise. It’s also great for cash-flow since the business gets the money up-front, before the service has been fulfilled.
The business daily deal aggregators differ in that they don’t tend to require such a large discount and secondly they don’t take such a large cut.
Daily deals worked in the B2C sector because of impulse buying. The problem with trying to replicate this model in the B2B sector is that impulse buying does not exist, at least to the same extent.
What we’re seeing instead is a growth of free-trials, and many companies offering free offers to get in the door. Companies know that it is six times easier to sell to you if you’re an existing customer, so they’re willing to take a hit on any initial sale and mark it down as a ‘cost of sale’.
Comparison of UK B2B Deal Sites
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If there are any B2B deal aggregators you’d like to see investigated and added to the list, let me know in the comments below.