Why Groupon is not the long term strategy for travel agency?

Travel agency and Groupon
Is any of the flash sales sites like Groupon becomes your main revenue source?
Travel agency business might be endangered when their business model started to build upon flash sales sites. Besides ruining your brand awareness in the long terms, following are the deeper problems that travel agency might not be highly aware of.

  1. Travel agency might face cashflow problem
    Typically,  travel agency (client) negotiates with Groupon (or other flash sales sites) on contractual terms to pay the travel agency (client) within certain guaranteed short period of time after a deal had been redeemed with the travel agency (client). But, sometimes flash sales site (Groupon) might delay the payment for a long period of time. And this delay would cause cashflow problems for the travel agency (client). This is not a new case, we saw this happened earlier in the year when Groupon faced a S$290,000 lawsuit filed by Villas International. If you were not the similar victim, be prepared.
  2. Travel agency does not truly own the customers
    Most of the time, customers generated to Groupon’s client (travel agency) are Groupon’s loyal customers. In other words, they are cheap deals loyalists. They might choose other travel agency’s deal over you some day, when you weren’t offering any cheap deals. And to secure this customer, travel agency needs to line up a series of cheap deals to always win them back. This, in the long run ruins profit margin for travel agency and of course eroding the business in the long run.
  3. Travel agency have low bargaining power
    We all know Groupon or other similar local flash sales sites might have larger customer database than travel agency. And being popular and offering guaranteed sales service, Groupon has better bargaining power in choosing which travel agency (client) to be featured on the platform. The exclusivity offer with Groupon hurts travel agency as travel agency needs to slash a big discount and only can market through Groupon channel. Other flash sales sites work in similar model.

Therefore, to acquire more customers in a safer way is to redefine the unique proposition of your travel agency again, and start market through offline and online channels. Online branding and marketing to generate potential sales is not a new thing today. Online advertising channels like Facebook, Google ads offers very comprehensive coverage to acquire new customers. But to be professional takes time, which is why many online advertising agencies are out there to help. But to cover the fundamentals and start with the lowest marketing cost, we believe online classified listing websites would be a very viable options for travel agency. Let us know if you interested to know more, this link here basically covers the basic.

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