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DAILY DEALS TO DEALS OF THE DAY THE RETAIL PHENOMENA AND/OR MARKETING CURSE* *PRESENTATION PRIMARILY FOCUSED ON PRODUCT RELATED OFFERS Michael Romanies FUEL Marketing and Sales MikeR@FUELmarketingandsales.com Michael Romanies,2012

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THE BEGINNING Woot.com (Want One Of These) Site Started in 1999 Acquired by Amazon 6/30/2010 (Est $110M 09) One Deal per day Web only through 2011, then e-mail long after Groupon Channels added Sold 1M t-Shirts in first 18 months, single press WootOffs and Bags of Crap Woot, Yugster, Tanga, Deniath Amazon Gold Box & Lightning Deals (acquired Woot)

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THE TRANSITION The Nerds are overtaken by the Marketing Guys (e-Mail Solicitation, then the lines BLUR )

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PYRAMID POWER Groupon Living Social, KGB Eversave aDealio, Moolala, Morgans List Revenue

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DEALS OF THE DAY SITES THE MARKET The Players The 80/20 Rule Groupon (39M+/49M+ domestic emails, est ~90M WW) Goods 39M+, Grouponicus 29M+ Living Social (60MM+ World Wide e-mails) KGB, EverSave, etc. all claim to be #3 1,500+ sites in 2011 Big Fish Entering Google Rogers Communications CBS Facebook DOA

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DEAL OF THE DAY SITES THE RIGHT RETAILER The Players cont. Generalists Groupon, Living Social, etc. Oh yea Amazon & eBay Themes Groupon Goods, Getaways, etc. Niche Players Gilt Group Totsy Mommasource Deniath

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GROUPON THE KING OF THE HILL Groupon Started Oct. 2008 By Dec. 2010 175 Domestic markets + 47 Countries, 33.7MM subscribers Rejected $4BB and $6BB offers from Google ($2BB revenue at the time), Mid 2011 Nov. 2011 IPO Valuation of $12.8BB raising $700MM, Currently under $3BB Market Cap Groupon Goods ~ Sept. 2011 Test first e-mail achieved estimated $2MM Revenue Estimated 2012 Revenue of $600 - $800 MM By Comparison Groupon 2011 Revenue $1.6BB (Billings of $4BB) Amazon 2011 Revenue = $48BB with projected 2012 at $64BB Living Social Shop (Goods) is projected to hit $200MM in 6 months this year Gilt Achieved a total of $500MM in 2011

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GROUPON THE GROWING AMOEBA Groupon (The Deals of the Day) Regional Offers Groupon Getaways Groupon Goods (1/wk to 3+/wk) Groupon National Groupon Now! Groupon Gifts And then theres Canada.. Groupon Regional Offers-- Groupon Quebec Groupon Goods Canada Canadian National

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IMPLEMENTATIONS - REDEMPTIONS Redemptions Voucher Codes Services / Products Offer Period Voucher Redemption Period Redemption Post Redemption Period & Valuation Stored Value, escheatment- Abandoned Property Special Case - Now Deals Daily Cut-off, sales are NET redeemed and verified Product Redemptions Delivery, POD, Tracking, Response Times

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( OF OF OF OF .)^3 AKA THE DEAL The Mantras BigLots!: Name Brand Products at Discount Prices Tuesday Morning: Branded products at Savings of 50-70%+ to the consumer DOD Sites: Deals at 50% or More off As Fast as Amazon** Branded vs. Unbranded products and services Effect Discount and Margin Effect Sales Product/Service Categories Effect discounts and margins and delivery expectations

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DEAL SKINS Daily Deal/Deal of the Day Durations of Sale Duration of Redemption Un-redeemed Dead or the Undead Zombies Run of Sites Discounted Currency Catalogs (emerging) Complimentary Offers (emerging) Niches expanding Themed Offers

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CAVEAT VENDITOR (SELLER BEWARE) VENDOR CONSIDERATIONS AND GOTCHAS Pricing The Discount (consumer) Marketing Services, Commissions, etc. The Hidden Fees CC Fees (on the DEAL value 2.5-2.9%) DFIs Pick-up Returns Allowance Taxes Returns and Cancellations (Quick Redemptions) Cash Flow Lost Shipments

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CAVEAT VENDITOR (SELLER BEWARE) - 2 VENDOR CONSIDERATIONS AND GOTCHAS - 2 The Title Whose Sale it is? Exclusivity Region Bundle/Price Time Period Redemption Period of Deal Residual Value Voucher Redemption Late Returns

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OTHER CONSIDERATIONS KNOW WHO YOU ARE DANCIN WITH Demographics M/F Groupon vs. Amazon Age Income Region Loyalty & Up-sells List Games (Amazon TOP XX) Post Sale Halo Sales Negation of Negative Reviews Brand Bragging

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DEAL INGREDIENTS RECHECKING THE RECIPE Inventory (Physical, Time & Resources), Availability Deliveries and 3PL Pricing, Margins, Packages & Bundles The Terms (Tips, Hours/menu restrictions, etc.) The Up Sell Recurring Revenue Opportunities Cash Flow Delivery Out of Pocket Receivables Cancellations Currency & Taxes Oh Canada!

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WHY ME (YOU)? Customer Acquisition Cost Annual or Perennial? Launch - Sampling Overstock (Inventory Limits) Out of Season Fashion Changes Holding Costs Seeding next year Up-sell opportunity Grill Only Menu items no Bundles Older versions Marketing Expense - Advertising

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WHY ME (YOU)? 2 THEIR PITCH Customer Acquisition Cost Branding (Brand Advertising vs. Transactionary Advertising) They (vendors) are paying a premium for PPC, Key Word search, emails, etc. just for 'eyeballs'. Groupon delivers that kind of exposure + actual buyers at either a fraction of the cost, and is the case with high margin businesses (software, subscriptions, printing, many services, etc.) even doing a huge profit. Most businesses put a $ value on acquiring a new customer because they know the repeat buying habits will yield X ROI. The cost of acquiring a customer through Groupon is always a fraction of that value and that doesn't take into account the number of 'eyeballs' from people who didn't buy the deal. In most cases, Groupon is a windfall for businesses (especially online businesses) looking to generate brand awareness and word of mouth.

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MY CRYSTAL BALL Legislation & Litigation will solve all of the grey areas within 2 years (Michael Romanies 2010) Consolidation & Specialization Channels Too big to fail = Too big to continue the growth rates at status quo Features for up and cross-sell (Netflix, Amazon) Niche Database Mining & Niche e-lists go deeper & wider 3PL goes Regional (Amazon, Google announcements)

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EXAMPLES Honestetch VHS to DVD: a TOP 100 Deal Site Product (Yipit) Groupon, Living Social, KGB, Eversave, Google, DealFind, DealSave, Moolala, AAA/digistrative, DailyDeals, Spotlight Denver, DealGenius/Ebay, Amazon Honesetch Audio Recorder Deluxe/Plus, Film Scan & Save The Clicker Universal Remote w/Bottle Opener Groupon, Google Serif Graphics Software (Digital Download) Groupon, KGB, rDeals, Google Total Training Training (Web Subscription) Secret Styler Fashion Accessories Nitro Strike Fire Extinguishers BottleBoss Wallet Credit Card Bottle Openers

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DAILY DEALS TO DEALS OF THE DAY THE RETAIL PHENOMENA AND/OR MARKETING CURSE Michael Romanies FUEL Marketing and Sales MikeR@FUELmarketingandsales.com

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