Are Vouchers Making a Comeback?

F. Scott Fitzgerald once said that there areno second acts in American lives, but the voucher business may beproving him wrong. For a time, it seemed as though vouchers wouldbe replaced by gift cards and other forms of electronic payments.The rise of social buying businesses like Groupon and LivingSocial,however, has brought the voucher back onto the scene using21^st -century technology.

Two big deals, one from each of the companies mentioned above, havecommentators speculating about the power and value of group buyingfor companies and consumers. In August 2010, Groupon sold 441,000vouchers for Gap Inc. that let consumers pay $25 for $50 worth ofapparel and accessories. In January, LivingSocial sold $20Amazon.com gift cards for $10, reportedly selling 1.3 million dealsin 24 hours and bringing in over $13 million in revenue.
Groupon recently turned down a $6 billion offer from Google.LivingSocial received a $175 million investment from Amazon, thecompany revealed in a Dec. 2 press release. In the release,LivingSocial stated that it had more than 10 million subscribersfrom the United States, Canada, the United Kingdom, Ireland, andAustralia, and that it expects to bring in more than $500 millionin revenue in 2011.

All of this points to a new player in the prepaid space – onlinevouchers. These lie somewhere along the spectrum between couponsand gift cards, but they will be a growing segment and one thatmerchants will need to plan for and figure out their strategytowards.