NEW STANTON, Pa. — In the latest twist on digital couponing, three regional operators are partnering with an online provider that offers generous Groupon-size discounts on CPG products to grocery shoppers willing to purchase the products in advance.
The online provider, Chicago-based Aisle50, is supplying the promotions to customers of Lowes Foods, Winston-Salem, N.C.; at least 63 independent Shop ‘n Save stores supplied by a Supervalu warehouse here; and, as of last week, Homeland Stores, Oklahoma City,
Shop ‘n Save customers could recently select from among a dozen deals on Aisle50.com, including $7.47 off on three boxes of Tastykake Family Pack Treats, $4 off any three Ore-Ida Potato Products and free two-liter bottles of Coca-Cola. The discounts generally range between 30% and 50%.
To take advantage of any of these offers, a Shop ‘n Save shopper would buy the product at the discounted price at Aisle50.com — say $6 for two boxes of cereal that would normally cost $10 — using a credit card; at the same time, the deal would be loaded onto the shopper’s Perks loyalty card. At her next trip to Shop ‘n Save, the shopper would purchase the promoted product at the regular price ($10), but would actually be charged nothing except tax.
Because they are pre-purchased, the redemption rate of these offers is “close to 90%,” said Christopher Steiner, co-founder of Aisle50. Shoppers have a few months to redeem their deals, though 52% do so within 48 hours, he said.
As for the store, it is electronically reimbursed for the $10 by the manufacturer within a few weeks; thus, there is no cost to the retailer. Aisle50, in turn, reimburses the manufacturer for the discounted price ($6), less 15% to 20% that it keeps for itself. Manufacturers have the ability to cap the number of products available via the deal.
Pay for Performance
How do manufacturers afford these large discounts, plus Aisle50’s fee?
“For the manufacturers, there is no wasted distribution cost,” explained Steiner. “They just pay for performance. They’re only paying when someone goes into the store and gets their product. That enables them to in fact offer these larger discounts and get more people interested.”
In other digital programs, he said, brands pay for each digital offer printed, whether redeemed or not. Among the brands participating in Aisle50 are Kellogg, General Mills, Del Monte, Unilever, Chobani, Clorox and Borden.
Shop ‘n Save, which has been partnering with Aisle50 since March, introduces one new offer per week via email along with existing offers, which last up to 30 days, said Pete Bazanos, emarketing manager for Supervalu’s Eastern region, which supplies Shop ‘n Save independents in Pennsylvania, Ohio, West Virginia and New York. All 63 Shop ‘n Save stores subscribe to the program, and Bazanos expects an additional 12 stores in New York to join after completing a conversion to Shop ‘n Save. The program is also supported by Shop ‘n Save’s loyalty card partner, ProLogic, Bloomington, Ind., which handles POS maintenance.
In addition to email, Shop ‘n Save promotes Aisle50 — with a link to Aisle50.com — on the common website used by the stores, as well as in weekly circulars and store signage. The Shop ‘n Save website also allows shoppers to download other electronic offers to their card.
Bazanos said he is pleased with the number of shoppers subscribing to the program, which he estimated to be between 5% and 10% of all Shop ‘n Save customers, and still growing. The average basket size of an Aisle50 shopper is about 25% higher than a standard basket size, he said. The program is also attracting “secondary shoppers” who would otherwise come infrequently and can be converted to primary shoppers, he said. In addition, “customers are referring the offers to friends and we’re seeing one-third of downloads from referrals.”
Shop ‘n Save stores have observed a typical redemption rate of 95% for the Aisle50 offers, though it has dropped to 66%, Bazanos said. About 80% of the offers are redeemed in the first week after they are purchased at Aisle50.com. “Customers are committed since they’ve made the purchase,” he said. “So it drives visits.”
The stores have not found themselves lacking inventory to support the deals, Bazanos said, in part because many of the deals are for multiple SKUs and not limited to one size or flavor; if a particular SKU is not available, shoppers have several weeks to redeem the offer. Plus the percentage of shoppers redeeming the offers is still low enough to be manageable. Bazanos said Supervalu will confirm that the stores carry an item before Aisle50 will post a deal for the item on its site, as well as provide stores with a list of upcoming deals. “It’s not a program that needs a lot of manpower from us,” he said.
Sidebar: Digital Coupons for Smaller Retailers
MOUNT PLEASANT, Mich. — Ric’s Food Center, a five-store operator here, fits the description of a small retailer who wants to offer digital CPG coupons but found that difficult to do until recently.
Over the past few months Ric’s has been able to offer up to 70 printable coupons on its website, ricsfoodcenter.com, shared by its five stores. This has been made possible by Coupons.com’s automated Brandcaster Retail program, a free self-service platform that enables retailers of any size to offer full digital coupon galleries on their websites, an ability previously available only to Coupons.com’s largest retailers.
Most significantly, Brandcaster Retail enables retailers to publish only those coupons that apply to the products they sell. “We were very interested in being able to have something on our webpage, but there was the risk of having just a bunch of [coupons] that were for food products that we didn’t carry,” said Monica Reynolds, co-owner, Ric’s Food Center. But under the new program, “once a week we look through and choose items that we think would be of interest to our consumers. It takes me five minutes to do it. It’s very simple. “
Coupons.com’s printable coupons have an average redemption rate of 18%, said Steven Boal, chief executive officer, Coupons.com.
Coupons.com also shares revenue with retailers when coupons are used from their sites. Retailers can also elect to feature display advertising from Coupons.com around their gallery and generate revenue on a per-impression basis.
Read more: Albertsons Runs Groupon Deal
For many larger retailers, Coupons.com manages the coupon gallery, removing coupons for unavailable products via file matching of the retailer’s item file, said Boal.
More than 55.7 million American consumers are now using online coupons, representing 25% of the U.S. population, up from 49 million in 2010, according to Coupons.com.