Wanna promote yer business??
Groupon share value takes a nosedive
WINDOW OF OPPORTUNITY
CAMERON JUNIOR IS A BIG FAN OF FLASH-RIOT SHOPPING
Research In Motion shares were on fire following the upsurge in demand for the Blackberry Torch. Blackberry has now usurped the iPhone as the Flash Rioters top choice for mob mobilization and the term "blackberry picking" is now being used by the media to identify the bargain hotspots where the best riot-shopping deals are available.
In the news: "...shoppers have coordinated their actions through BlackBerrys and the ultra-secure, virtually untraceable BlackBerry Messenger (BBM) service."
As predicted in this publication...
"Vancouver may be the test bed for this exciting new model but we can expect this new trend to be seen in most major cities in the very near future."
See below for our original article on marketing analysis for Flash Riot shopping.
Is Flash-Riot shopping set to be the next big trend?
The principle of on-line discount purchasing is simple; to get the local retailer to heavily discount their prices in return for local on-line advertising, where the punter purchases goods or services at fire-sale / liquidation prices.
The deals are often seen under banners that read "NEVER PAY RETAIL AGAIN" (aimed at the punter) and "NEED CASH FAST?" (aimed at the retail store).
The way that this type of marketing works is for the punter to pay the on-line discount operator for the service or product, and the discount operator in turn hands over a percentage to the retail merchant (after a set period of time - up to two months in some cases). Peter and Penelope Punter get a good deal as the discount is usually at least 50%. At best the retail merchant ends up with around 25% after the discount operator has taken a cut, but it is often a lot less.
The commission paid to the on-line discount marketing company tends to be so high that the deal will almost certainly be a loss-leader.
The expectation is that having sampled the offerings, the Punter family will then return as regular customers and pay the normal prices.
Unfortunately for the merchant, Peter and Penelope Punter are far more likely to not return but instead adopt the strategy of the Australian cane toad and simply wait until another easy tasty morsal of an offer to turn up.
This leaves the small local businesses in a position that they are trying to survive by offering fire-sale deals and constantly competing with one-another with knock-down prices.
Scenario: Fast Food Pizza runs a discount promotion. During the promotion their competitor, Fast Food Burger, notices that their sales are down because of their rival's promotion. Two weeks later Fast Food Burger also "pulls the Groupon trigger" to return the compliment.
Result? Rather than Peter and Penelope returning to either establishment, they start to check around to see what other fast food joints are offering deals. This is the classic Australian Cane Toad scenario.
So, a large wedge of cash has just been donated by each fast food outlet to the marketing operators and a precedent has been set for Mr and Mrs Punter to expect discount deals on a regular basis. Sound's good eh?
There's only one kind of business that is going to benefit here, and that's the big marketing operations which run the on-line discount systems.
In order to participate as a retailer in a Flash-Riot promotion the merchant needs to sign up for the Flash-Riot insurance policy. The relevance of this insurance is explained below.
An 'impromptu' Flash Riot is organized through a unique kind of crowdsourcing. Each hired hooligan (collectively known as 'the riot squad') is given a list of participating stores targetted for looting (all for the price of a few beers and whatever they can carry from the stores). The hooligans then nick all the stuff out of the store (aided and abetted by tourists and other shoppers) and all the retail owner needs to do is submit an insurance claim that is 'padded out' a bit.
The Flash Riot promotions company makes its money by brokering the securitized insurance products that they sold to the retailer, so the retailer has minimal outlay for a handsome return on his investment.
Flash riots are scheduled for twice a year, once at the end of August and once at the end of January so the retailers can get rid of all their surplus stock at the appropriate time. These regular events also helps the tourist industry, since many holidaymakers will visit Vancouver just to take advantage of the many products 'on offer' plus a thrill that rivals "Running with the Bulls" in Pamplona, Spain - although you might suffer a tasering courtesy of the RCMP rather than a good old fashioned goring.
Chris Conman, the CEO of Flash-Riot Promotions™, explained the simple psychology that underlies the approach of the new venture; "Bystanders in large crowds provide one-another with an acceptance that it is OK to rubber-neck and take photos during a disturbance, whereas if it was only a small group of onlookers then they would quickly run for the hills. The crowd not only provides a convenient cover for the hooligans, but also encouragement for them to be even more extreme and 'play to the crowd'. Of course, the bystanders that are passively supporting all this will be the first to complain when this place is turned in to a police state. Basically they're a bunch of twats, but it provides us with a great opportunity to implement our business strategy through the voluntary participation of these witless onlookers."
It seems that most small businesses will only gain short term relief by getting sucked in to the on-line discount deals systems, and they might as well just not bother as all they will achieve in the long term is to cut one-another's throats. It gets worse. The customers become accustomed to cut-price deals so they start asking for discounts even when none are on offer - it becomes the de-facto approach to purchasing anything. Obviously this will be a big hit for The Punters and others that are joining the rapidly growing something-for-nothing crowd. Emboldened by 'Punter Power' they will soon be heading out armed with pitchforks and torches to demand their cut-price goodies from ALL the local shops.
Flash-Riots on the other hand has taken a whole new approach to the idea of 'crowdsourcing'. With paychecks getting ever smaller, this new style of 'opportunity shopping' will appeal to a growing number of people that are looking for a bargain with a bit of visceral entertainment thrown in to the mix - it promises to be a real winner.
As Chris Conman points out, "...most of the small businesses offering such big discounts are acting like turkeys voting for Christmas... it's just nuts. They would do much better by combining their resources and offering deals through their own collective marketing co-op. Unfortunately these small businesses are much happier just killing off one-another and the marketing companies use this mindset to their own advantage."
The two business models couldn't be more different. Whereas the on-line discount model sucks cash out of the small business and in to the wallets of the big marketing organisations, the Flash-Riot model takes money from the big insurance companies to fund the retailer as well as the numerous small businesses that are needed to clean up and fix the resultant damage. This keeps the money in circulation at a local level and working as the oil for the economy - as opposed to transferring it out of the system into the pockets of big business. Vancouver may be the test bed for this exciting new model but we can expect this new trend to be seen in most major cities in the very near future.