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Coupons, Get Yer Coupons!

By Bizbox

As Black Friday--where, this year, the "black" may be less about the ink--is upon us, we thought we'd point your way to this recent New York Times article about online coupons. They are all the vogue, apparently, and have even spawned side businesses: Websites devoted to finding secret coupon codes and serving as a clearinghouse for users to access them (for a small commission, of course).

We've already written about how the Internet, and its infinite tranche of information, is if anything more conducive to price-cutting as a strategy in lean times than is, say, your local mall. More conducive and, to some extent, more necessary, because if you're not doing it, your competitor is, and everyone will know about it soon enough.

The article articulates a tension between some retailers who have fashioned their discounts and secret coupon codes only for reliable customers and some of these coupon-publishing Websites that reveal the secret coupons to all. Frankly, though, and especially at a time like this, we think those complaining retailers doth protest too much.

Right now--yes, even right now, during prime gift-buying season--there are some people who are absolutely not going to make purchases without those coupons. As the Times points out, this is hardly unusual: such shoppers are "the digital era’s version of bargain hunters who used to spend hours clipping coupons to shrink their grocery bills."

Now, do you want them shopping at your store, with its secret coupon code, or at your competitors', with their more public one?

More broadly, these clearinghouse Websites are a great idea: if anything, they improve the retail market's efficiency. A bunch of graphs in Econ 101 tell us that the absolutely most efficient market is not in fact the perfectly free market, where price is set at the level at which the right number of people will purchase the right number of supply. Rather, the most efficient market is one in which each individual consumer pays the highest amount he is willing to pay for a particular product, even if that means the same product is sold to different people for different prices. For practical purposes such a market can never be attained, which is why you always hear about the free market's efficiency.

With couponing, you get something at times resembling this hyperefficient market, though. The consumer who, for whatever reason, is willling to pay full retail price for a given product may still do so: he may not take the time to find your secret coupon code in favor of going straight to your Website and clicking "Buy". But the consumer who will only buy that same product for 20% less will take the time to search out the coupon and then will use it. As a retailer, you should be encouraging both. You can't do much to control their demand; you can, however, give each one what he wants.

Which is why we're proud to publish the names of the clearinghouse Websites the Times mentions: RetailMeNot.com, FatWallet.com, and the Budget Fashionista. Happy Black Friday!

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