Editor’s note: Buckley’s company, Grocio, reported on below, has launched its website. Visit www.grocio.com to learn more.
Recently when I was visiting, Grandma Neal offered me a container of cake frosting.
“I don’t even have a cake mix right now,” I told her.
“Well honey,” she said, “I got these with a coupon and I’ve had them frozen for a while now and I just don’t need them.”
She couldn’t pass up a good deal.
That’s the power of the coupon. My Grandma and Grandpa Neal lead simple, bargain-hunting lives. They plant a garden every year, and Grandma saves her “nice” perfume for special occasions.
Saving money is a tradition I grew up hearing my family discuss at the dinner table. Bargain hunting is in my blood, but I draw my limits at coupons. I’d never spend an hour clipping them.
I am an iPhone-addicted, Facebooking 25-year-old. I keep up with community, events, friends and bargains by checking my news feed and Yahoo’s front page in the morning. The morning newspaper? Coupon clipping? It feels nostalgic.
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Out of curiosity, I took the September 5 issue of Tulsa World to my grocery store produce aisle and put it on the scale. The whole thing weighed 1 pound, 10 ounces. Then I removed the coupon bundle. The weight of the paper dropped to 12 ounces.
The coupons and ads alone weighed 15 ounces – just shy of one pound. An entire pound of paper and ink for every single Sunday edition of Tulsa World? According to the Audit Bureau of Circulations, Tulsa World had a Sunday circulation of 143,856 in 2009. That means around that many pounds of paper in ads alone every single Sunday.
Now multiply that number by 52 for each Sunday of the year. That’s 7.4 million pounds of paper, or nearly 10,000 trees, all reduced to ads and less than 10% of them get used. It seems obvious that such a wasteful, low-return industry can’t thrive in the age of smartphones and sustainability.
I sat down with Gerald Buckley, a former Apple Systems Engineer and passionate technology geek. Buckley is the President of Grocio, a Tulsa-based company specializing in distributing the circulars to people through a $5.99 iPad application, as well as their website, a “craigslist for coupons” concept.
In 2008, Grocio won the top prize ($30k) at the Tulsa Entrepreneurial Spirit Award; now he’s developing applications to modernize your grocery list.
As we sat in a coffee house, Buckley demonstrated the Grocio application to me. It was a sleek, high-quality PDF of what I’m used to seeing in the paper – a crisp, digital smörgåsbord of product images, logos, and special offers. A single dropdown menu gives you the option of looking up circulars in 23 cities, followed by a menu allowing you to choose the store. There were big names–Target and Wal-Mart along with other businesses that do not print their circulars. Whole Foods and Akin’s are already green in this respect–they refuse to print their circulars.
Print coupons? Not necessary – just show your iPad to the cashier.
In fact, the same bar code scanners that scan paper coupons will read a bar code on an iPhone or iPad screen.
“If printed coupons last five years I’ll be shocked,” Buckley said. “With the rise of smartphones, embedded chips in credit cards… It’s completely realistic to expect the printed coupon to be replaced by more efficient and effective distribution methods and reward systems.”
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So, why are we still printing coupons and circulars at all?
It’s still big business. For now.
Inmar, a large scale coupon transaction processor that serves over 33,200 retailers and manufacturers, reported that 89% of coupons are still distributed with newspapers, and half of the coupons they process came from newspapers.
While it may appear that the coupon industry is on the rise, Inmar also reported that less than 10% of printed coupons actually get redeemed. Moreover, $1.1 billion less coupons were redeemed in 2009 than in 2000, yet they are printing 46 billion more coupons than in 2008. Why print more coupons when people are using less? I don’t get it.
The print coupon system is still working–it’s just beginning to look very clunky.
There’s an obvious trend toward seeking bargains online instead of in the paper. Searches for “printable coupons” on Google increased by 67% and online coupon redemption shot up 360% in 2009.
It’s possible that the people are ready for paperless bargains, but the big corporations aren’t ready to give them what they want yet.
Three giant companies are responsible for about 80% of the coupons in America: SmartSource.com (owned by NewsCorp), Proctor & Gamble, and Valassis, which puts out the RedPlum inserts. Originally, Valassis was distributing RedPlum’s inserts with the newspapers, but they now claim to touch 9 out of 10 United States households via direct mail.
Coupons.com is one of the biggest online distributors of manufacturer coupons, but you still have to print them out and take them in.
Why use the paper? Why not just show your smart phone coupon to the cashier?
The answer: Accounting. Here’s the lifespan of a printed coupon:
1. A manufacturer of a product (not the store) decides to advertise in a circular with coupons. The manufacturer makes a deal with a circular, then the coupons are printed and delivered to you.
2. You clip the coupon and take it to the grocery store, which accepts the coupon like it is money.
3. The grocery store sends the coupon back to the manufacturer and trades the coupon for money.
Every coupon that is collected must be sorted and counted. Clearinghouses are outsourced (often, to Mexico) just to tally the coupons. They have to tediously make sure the coupons are tallied (and re-tallied) correctly and that they are not fraudulent.
Sound mindboggling? Now imagine every cash register of every grocery store in America turning in coupons for reimbursement-and Inmar doesn’t even process local, restaurant, and retail coupons. Obviously, it’s a lot of wasted paper, manpower, and money in a world where the technology exists to count coupons instantly.
People like Gerald Buckley see the end of this phenomenon as opportunity.
Technology is already revolutionizing the coupon industry. Groupon.com is a clean website and a simple idea: One fabulous deal per day. When I visited the site, the deal offered for my zip code was from Tulsa business Farrell Family Bread: $25 worth of bread for $12. This is no major corporation – this is a beloved local business I see each week at the Cherry Street Farmer’s Market. I was impressed. Does it work? When I looked, Farrell Family Bread had 608 buyers on the $12 bread deal. 608 times $12 is $7,296.
I would say that’s a good day in the local bread business– all without a single coupon being clipped.