National players continue to dabble in the localized playing field of social buying. Coinstar's
Yesterday, Groupon rival LivingSocial cleared 2,000 Vistaprint
The Redbox deal is unlikely to surpass the more than 1.3 million half-priced Amazon.com
This deal's nothing new. Redbox made the same offer to Groupon users back in December, ultimately selling 356,790 vouchers for three nightly rentals. However, the offer's a better deal than you probably think for Coinstar's DVD-flinging kiosks. It also suggests that Groupon is willing to try a different pricing model.
What's in it for Redbox?
I'm just as guilty as everyone for perpetuating the myth that Redbox rentals set a moving couch potato back merely a buck. The average transaction is a little more than two bucks, even before you factor in the recent addition of pricier Blu-ray and video game titles (which aren't part of the Groupon deal, naturally).
For every penny-pinching movie buff who's able to return The Social Network by 9 p.m. the next night, there's a careless customer popping Despicable Me back into the kiosk a couple of days late. In other words, selling three nightly rentals for $1 will probably result in another $3-plus in Redbox revenue if these codes get claimed by typical kiosk renters.
The Groupon deal is available to both new and existing customers, giving Redbox a golden opportunity to grow its base -- but one can argue that Redbox doesn't need the exposure. It has more than 31 million active credit cards on file, courtesy of the movie buffs hitting up its more than 30,000 kiosks. It claims to command 89% of the DVD kiosk rental market, and no one outside of NCR's
However, Coinstar has made it clear that it's trying to capture as many emails as possible from its Redbox customers. This will make it easier for the company to market deals directly. It will also come in handy when Redbox launches its long-overdue digital subscription offering.
What's in it for Groupon?
Groupon told Coinstar executives that December's Groupon was one of the three most successful promotions the fast-growing social coupon website has ever run. The vast majority of Groupon deals are city-specific, so it's only natural for national offers to stand out as volume producers.
Groupon sold 441,000 Gap $50 vouchers for $25 each this past summer. In terms of revenue, several other deals -- including Nordstrom Rack and Barnes & Noble -- have also outsold the $356,790 that Redbox's December deal grossed.
Is Groupon defining success by the raw number of vouchers sold, or does it have even more to gain from these deals?
For those not familiar with Groupon's high-margin model, the Chicago-based website takes as much as half of a voucher's discounted price. In other words, Redbox may be netting as little as $0.50 from these $1 vouchers. However, it doesn't seem to be worth Groupon's time to collect pocket change like one of Coinstar's namesake kiosks.
Groupon is promoting the Redbox deal with a banner across all of its city-specific deals right now. That seems like a lot of work for a deal that may net it less than $150,000. Could Coinstar be paying more than 50%? In the spirit of lead-generation, Coinstar may even be justified in paying more than 100% for new Redbox customers.
We don't know whether that's the case, but Groupon seems awfully interested in playing small ball with video renters these days. It sold 35,034 vouchers for NCR's Blockbuster Express -- offering five nightly rentals for $2 -- just two weeks ago.
If Groupon's growing appeal allows it to start charging bounties for new customers on top of its discounts, Google
Then again, Groupon is likely to sell fewer Redbox vouchers when this three-day offer ends tonight than it did two months ago. Since Groupon's wingspan has grown over the past two months, has Redbox's popularity waned, or has the allure of Groupon's national deals diminished? Perhaps the novelty of this particular offer isn't as potent the second time around.
Right now, Groupon's a deal-sniffing source for bargain watchers. But as its model evolves, it could also become a great way to gauge interest in certain national companies.
Have you ever bought a Groupon deal that didn't work as planned? Share your thoughts in the comment box below.
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Longtime Fool contributor Rick Munarriz is a fan of discount sites, and he's already tracking local deals through Groupon and LivingSocial. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.