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Tampa Bay area businesses cash in on Groupon, other deal sites

Given the state of the Tampa Bay economy, you might think that a business like Da Vinci Teeth Whitening would struggle to attract customers.

Think again.

Thanks to the Groupon and LivingSocial daily-deal websites, the Tampa business has sold more than 1,200 laser teeth whitening treatments. Most went to first-time buyers — a significant number of whom referred friends and family, as well.

"Just the other day I was up at one store and a gentleman who had bought a Groupon finished his service, and while he was still in the chair called his daughter to get her down there, and she did it right after he did it," said owner Gerry La Ninfa.

Daily-deal sites pair with merchants to sell online coupons for limited-time deep discounts. For example, Da Vinci Teeth Whitening offered its service for $99, a 67 percent discount from the regular price of $299. A week's worth of deals might include a four-hour boating class, a month's worth of boot camp classes at a gym, pizza or 20 units of Botox.

The market for these deals is growing in Tampa Bay. Since the beginning of the year, the number of daily deals offered in Tampa has increased 263 percent, according to 8coupons.com, a daily-deal site aggregator. That's a faster growth rate than the markets in Miami (62 percent), Orlando (174 percent) and Charlotte (92 percent). The total number of deals offered here is second only to Miami in Florida.

The daily-deal coupon business overall is in flux, according to the New York Times. Last year, Google offered $6 billion for Groupon and was rebuffed. Groupon had plans to go public at a valuation of as much as $30 billion. Now that public offering has been put off amid what the New York Times called "coupon fatigue'' and turmoil in the financial markets. Dozens of Groupon copycats, the Times said, are "closing, reformulating or merging.''

Whatever second thoughts investors are having, daily deals are popular among local consumers and businesses. Eleven websites offered at least one Tampa deal in August.

McGee Auto Service and Tires, which has 10 locations in Hills­borough and Pinellas counties, found the most success with Groupon, said district manager Kevin McGee. The company recently offered an oil change at a 53 percent discount.

"We had tried other sites that were like Groupon, but we only ever sold nine or 10 deals," McGee said. "In our first time with Groupon, we sold 812 deals in Tampa. I'll be honest — I was very surprised at how many sold."

Groupon and LivingSocial give local businesses the ability to reach people by e-mail, said Larry Salkin, who runs the Tampa Water Taxi Co. The downtown-based company recently sold 449 ticket packages for an evening harbor tour at 40 to 50 percent off.

Groupon, the largest daily-deal site in Tampa, sends its e-mails to "tens of thousands" of subscribers every day, said company spokeswomen Julie Mossler.

"Groupon has a customer base that would be impossible or cost-ineffective to buy," Salkin said. "When you stick yourself in a customer's e-mail, it brings you to the front of their mental page."

Offering a product at such a deep discount carries its own set of concerns.

"There are some downsides," Salkin said. Sometimes "you end up eating your own young, which are existing customers who would have paid a higher rate but buy the Groupons, so you ship away your own average price per trip."

Nevertheless, Salkin said he thinks daily-deal sites bring in more customers, some of whom will return and pay full price or refer their friends. La Ninfa, the Da Vinci Teeth Whitening owner, estimates that 10 to 15 percent of customers who come as a result of LivingSocial or Groupon offers end up generating new customers through referrals.

At McGee Tire, the bump in business has been immediate, even though the company performs the discounted oil changes for a loss.

"We're probably losing half our money on those, but in the automotive business, you're always trying to make new customers, and with these guys, you hope they need other services as well," McGee said. "We noticed an additional $11,000 of incremental income from additional services added to the Groupons. And that's with only one-fourth being redeemed."

Tampa Bay area businesses cash in on Groupon, other deal sites 10/04/11 [Last modified: Tuesday, October 4, 2011 8:34pm]
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