In the daily deals/group buying industry, any unredeemed voucher commonly creates pure profit for merchants. Unredeemed vouchers are more prevalent than one would expect, and there are, in fact, numerous highly-active secondary markets to buy and sell unredeemed vouchers. They are basically an industry on their own.

With Zuupy CrowdDeals, we have an integrated merchants’ area that allows merchants to indicate redemptions as they happen. However, merchants only have access to certain details of the sold vouchers and must enter the rest of the details from the printed vouchers themselves (specifically, the last three digits of the voucher serial numbers) to indicate a redemption. The core benefit of this feature is simple: merchants cannot fake redemptions, especially if your business model as a daily deal website owner is to only pay merchants upon successful redemptions:

The obvious idea in this article – apart from the fact that our daily deal platform can be used to handle voucher fulfillment in the manner described above – is to try to work with merchants on the basis of “payment only for redeemed vouchers.” Merchants hounded by daily deal salesmen will have enough bargaining power to say no, but, for the rest, they are unlikely to object, especially when they are not aware of the magnitude of the profit opportunity that lies in unredeemed vouchers. Whether unredeemed vouchers are beneficial in the long term is another question; the fact that they already happen means that you should not ignore it.

As a daily deal website owner, it makes little sense to pay a merchant for services they did not deliver. Neither should you.

Consumers are easily blinded by discounts. Daily deals exploit precisely this weakness. However, there is a big difference between daily deals as well as normal ecommerce and real-life physical sales transactions: you need to expend additional effort to obtain your purchased goods or services after paying instead of having your item handed to you immediately over the counter or delivered to your doorstep.

Ergo, any method that delays or discourages redemption creates pure profit. Make the window of redemption smaller or conditions more stringent, and careless consumers temporarily blinded by price into thinking “the trouble will be worth it because of the ridiculously-low price” will probably buy without actually redeeming when the time comes. I suspect that certain prepaid services, such as companies selling airplane tickets, travel packages, and cellular phone credits, also profit considerably from exploiting this gap.

This technique is, of course, ethically questionable, but it is certainly not unlawful – freedom of contract governs all commercial transactions. It is a well-known fact that the further into the future the redemption event is from the time of payment, the lower the chances of said redemption event ever happening are. Memory, unpredictability of schedules, sunk cost mentality, etc. work exponentially in favor of the daily deal vendors as time passes.

Merchants certainly are already doing this in some form, yet very few have actually formalized it into an actual strategy. Why not?