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Local businesses grow along with coupon sales

In just a few years, Dade City resident Rachael Woodard turned her small coupon mailing list into a profitable online presence with tens of thousands of customers.

Sales at The Coupon Clippers, Woodard's Internet enterprise, have jumped about 25 percent in the past year.

"The bad economy is good for us," she said. "It seems to be a change in mind set."

After nearly two decades of decline, the lowly coupon is back in style... with a twist. Tapping into the growing influence of online networks, companies are finding new ways to squeeze a profit out of the complicated coupon industry.

Twenty-five cents here, 50 cents there — the savings are tangible for shoppers who invest the time to find them, especially when gas prices can easily jump a nickel overnight. Americans used 2.6-billion coupons in 2007, making it the first time in 16 years that coupon redemption did not decline.

Online booms, busts

Like most traditional businesses, the coupon industry has tried to take advantage of the Internet in the past few years, with limited success.

Visits to coupon Web sites increased 66 percent in May compared with May 2007, according to HitWise, an online-competition research group. Despite that, online couponing remains a tiny industry. Only 0.2 percent of the 279-billion coupons issued last year were distributed online.

Invenda, the largest public online coupon company and operator of E-centives.com, has never been profitable. As of Jan. 1, the company had racked up a deficit of $162-million.

But one sector of Internet couponing has found a niche: communities of coupon sharing and strategizing.

A cottage industry of coupon networks has become profitable for people who wouldn't recognize their customers if they passed in the grocery store.

Woodard's business The Coupon Clippers was one of the first, moving online with a primitive Web site launched in 1998. Her site allows customers to special order coupons to be mailed to them.

She now has 40,000 customers making about 1,500 orders weekly.

"We've only scratched the surface," Woodard said.

She operates the Web site out of her home and hires independent contractors to buy stacks of newspapers, clip and sort the coupons. Distribution center staff then stuff and mail the envelopes to customers.

To make money, Woodard requires a minimum order of $3 and charges a 5- to 10-cent handling fee per coupon. She declined to give income figures.

Social circles move

Woodard's site has message boards to discuss new coupon deals, but another new Web site has nearly cornered that market.

HotCouponWorld.com features perpetually active forums discussing deals at chains around the country, strategizing on how to squeeze out the best buys.

It also hosts a searchable coupon database. Users can type in the product they want and print out a coupon.

The site was founded by two women who have yet to meet, and who had no business experience between them. It launched in July 2006 with about 300 regular users, growing to 8,000 in one year.

Now it boasts 44,000 members and about 800,000 unique visitors per month, said co-founder Julie Parrish, a 34-year-old from West Linn, Ore.

"Frugal is now cool,''' she said.

Though she would not divulge the site's revenue numbers, Parrish said it now makes money. The company will soon invest in an outside redesign.

"We're growing faster than we know what to do with," Parrish said.

Andrew Dunn can be reached at (727) 893-8150 or adunn@sptimes.com.

Bay Area

How these coupon kings are adapting

Catalina Marketing Corp., St. Petersburg

Prints coupons at grocery store checkout lines targeted to a customer's purchases. The company has expanded 35 percent in recent years, into 23,000 stores.

About 6 percent of its coupons are redeemed, compared with 0.5 percent for newspaper inserts and 2 percent for direct mail.

ValPak, Largo

Mails packets of coupons directly to consumers. The company recently constructed a $220-million production facility in St. Petersburg.

Shipped 20.7-billion coupons in 2007, and plans to increase that to 50-billion over time.
How coupons work

Coupons are issued by manufacturers, like Procter & Gamble, as a way to advertise their brand and to lure new buyers.

Big box or grocery stores collect the coupons and ship them to a processor.

The processor then sends them to the manufacturer.

The store is then reimbursed for each coupon, plus a few cents for a handling fee. The processor also receives a few cents.

Local businesses grow along with coupon sales 06/29/08 [Last modified: Friday, July 4, 2008 5:01pm]
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