The collective online shopping system: The impact of the effectiveness for the Portuguese business partners

Globalization and the emergence of the internet have significantly influenced the creation of new business models where the main goal is to effectively and efficiently implement strategies to surpass clients' expectations. The collective online shopping systems emerge in 2008, and may be considered as an effective promotion tool for business partners. In this context, the main goal of this research paper is to evaluate the perception of the business partners on the effectiveness of the last promotional campaign made using a collective online shopping system. Additionally, it is also analysed the consequents of effectiveness. The sample is comprised of 38 global business partners. The results lead to the following conclusions. First, the global effectiveness of the campaigns tends to be positive, mainly due to the non-financial effectiveness. Second, the global and non-financial effectiveness are predictors of their consequents, namely: word-of-mouth marketing, image, returning customers, customer retention, repeat the promotion and recommend promotion, while the financial effectiveness has no influence on any consequent. The existing literature on collective online shopping systems is still scarce. This research contributes to the literature by analysing the effectiveness and identifying the consequents of the effectiveness. From a business perspective, this study may help business partners to evaluate the impact on their business from promotional campaigns using collective online shopping sites and make a decision whether to join or not. From the site managers' perspective, this study may contribute to a better understanding of the perception held by the business partners on the business model's effectiveness and how to better meet their objectives.


INTRODUCTION
The globalization and the Internet have had an important role on the creation and development of new business models.Several companies have implemented new and creative online businesses.In 2008 emerged the Collective Online Shopping (COS) system, which offers daily discounts to various products and services, and has since then been considered one of the most successful and more profitable business, mainly when the key driver of the purchase decision for the consumer is the discount [8].
The COS system is a recent subject and two research questions may arise: i) is the COS system effective for the partners involved?; and ii) which are the main consequents of the effectiveness of the promotional campaigns for the partners involved?
To answer these questions a survey was performed on a sample of 38 business partners.We used descriptive statistics and linear regression analysis to evaluate the effectiveness of the system and the relation between effectiveness and its consequents.
Moreover, the following concepts were considered: 1) collective/group online purchases is a system which offers several daily discount on products and services and are delimited geographically [8]; 2) COS sites are virtual places for selling products and services with daily discounts, where the consumers may buy discount coupons, know the details of each discount, the place where it is offered and the duration of the offer, as well as being able to access information directed to the business partners; 3) promotional campaign corresponds to the promotions and discounts made through the COS companies; 4) business partners are all the suppliers of goods and services that have discount agreements with the COS companies, issuing the discount coupons; and, lastly, 5) effectiveness (studied form a financial and non-financial perspective) is defined as the level at which the results are in accordance with the objectives outlined by an organization [2][5] [12].
Answering the two research questions, this study may help business partners to evaluate the impact on their business from promotional campaigns using COS sites; and help site managers to better understand the perception held by the business partners on the business model's effectiveness.

II. LITERATURE REVIEW
To better understand this subject we first address the existing literature on the concepts of effectiveness and its consequents, in the context of the COS system.

A. Effectiveness
Research on effectiveness is not new and can be included in the modern organizational theory, being relevant not only at the theoretical level but also at the empirical level [21].Its concept and assessment are not consensual, being dependent on the type of organization and the different stakeholders' perspectives [2].
Thus, there are several models addressing the different approaches on effectiveness, such as, the rational model (goals), the systematic model, the strategic constituents' model, the contrasting values model and the ineffectiveness model [10][2] [21].Steers [23] performed a literature review on 17 models of organizational effectiveness and concluded that measuring effectiveness must be in line with the organization goals and, so, the definition of the evaluation criteria.Thirty criteria were identified by [4], including at the global, financial and non-financial levels, and the author pointed out that the criteria should be flexible enough to accommodate these goals.
In the present study, effectiveness is the degree to which an organization meets its goals, namely the degree to which the results are in accordance with the objectives that were clearly defined [2] [12].An effective organization is the one that implements the right measures in order to fulfill its needs and the needs of the surrounding environment [15][21].According to this definition, effectiveness is included in the rational model on the accomplishment of objectives [12] in which an organization exists to achieve one or more specific goals [2], i.e., an effective organization is the one where its results match its objectives.

B. The Collective Online Shopping System
The COS is a system offering daily discounts for several products or services and is considered an important tool for the retail market [8][16].This shopping system is recent and started in the year 2008 when the company Groupon (USA) began taking advantage from online marketing and media influence [8] [13].
The promotions through this type of companies are considered social promotions, where individuals incentive their family, friends and other individuals on their social networks to get to know them [6] [7].From the consumers' point of view, the COS brought out a thrilling and surprising commercial activity, where the consumers face different offers each day, which leads to some anxiety since they have to wait for the next day to know which new promotions will be available [8] [20].The main business idea is the discount offered, which can reach an impressive 80% on several products and services, allowing the consumer to face a low risk when trying these products.
Although the COS firms present a large variety of businesses, there are some specific industries that stand out.The services industry is predominant when compared to the products industry, with a large focus on leisure, entertainment and recreation [8] [13].The social promotions are characterized through [3][6] [13]: the number of coupons sold; the level of discount; the number of days that the promotion was online; the timeframe when clients can use the coupons; and the value of the coupon.
In Portugal, the COS market includes 31 sites and has registered a positive trend, with the metropolitan areas of Lisbon and Oporto representing 71% of purchases, centered around the acquisition of fashion products (clothes and accessories) and other products such as perfumes, books and toys [11].

C. Consequents of Effectiveness
The COS business targets deals with small and medium enterprises (SME), which usually do not have the necessary resources to market their products and services.
Dholakia concluded in his study that the main goal of several price promotions is to give incentive to the consumer to try a new product or even an existing product in a specific segment of clients [6].The author also states that, the higher the discount level, the higher the number of new consumers that are willing to try the product, thus leading to an increase in the effectiveness of the promotion on finding new clients for the company.This idea was also referenced by Lewis, where the author concludes that the short-term discounts and promotions may lead to a risk reduction for the consumer when trying out new products/services previously unknown to him [19].
Brand and products/services exposure to a new client base is one of the main objectives of several business partners when engaging on social promotions [6], but short-term discounts may also attract consumers that are only willing to buy during the promotion period [19].Additionally the consumers obtained during a promotional campaign tend to buy with less frequency than those that buy in normal periods [22].
Moreover, in a long-term perspective, the evaluation of the promotional campaign is measured by the probability of the business partners repeating a social promotion and recommending the promotion to other companies, both indicators of long-term business sustainability [6].
When considering the consequents of a promotional campaign, the effectiveness is also assessed through the propensity of the business to be shared by word-of-mouth and also through the image of the business partner.The word-ofmouth is related to viral marketing and occurs when information on a company, product or service is easily and costless shared between individuals, e.g., consumers, friends and family members [18].

III. RESEARCH DESIGN AND METHODOLOGY
This study is exploratory and the methodology followed is quantitative.The analyses are performed for two time frames and take into account the effectiveness of the promotion to the business partners: 1) the period before and during the promotion, which includes the goals (financial and non-financial) that the business partners want to achieve when entering the promotional campaign; and 2) the period after the promotion, from a medium/long-term perspective, where we analyse the relationship between effectiveness and its consequents.

A. Hypotheses
In this study, following many authors [1][2][9] [12][14], effectiveness is defined as the fulfilment of the goals of the organization.After the promotional campaign, we proceed with the analysis of its consequents: the impact of the promotional campaign on the word-of-mouth; the image of the business partner; the retention and returning of customers; and the repetition and recommendation of the promotion [6].Thus, we formulate the following hypotheses:

B. Data
To achieve the proposed goals, and taking into account the geographical dispersion of the business partners, we performed a survey with the closed questions divided in the following groups: Group A, perception of the effectiveness of the campaign in general terms; and Group B, perception on the effects of the promotional campaign by the business partner.To evaluate effectiveness we introduce the three questions presented on Table I, where the respondents evaluate effectiveness on a scale from 1 (not at all effective) to 10 (extremely effective).

ID Effectiveness' dimensions e1 The promotional campaign was effective e2
The promotional campaign was effective, in regard to the economic goals of the business partner e3 In order to improve the notoriety and image of the company, to increase the word-of-mouth, and to find new clients, the campaign was effective Regarding the different dimensions of the consequents of effectiveness of the promotional campaign, and since there is no literature addressing the exact same goals, we use a mix of existing and new items to evaluate each of the consequents (see Table II).For the word-of-mouth the items were adapted from Walker and Jean [24]; for the repetition of the campaign by the business partners the items were adapted from Dholakia [6] (item r1) and Kantsperger & Kunz [17] (item r2); and for the recommendation of the campaign by the business partners the item rc2 was adapted from Dholakia [6].All the remaining items were defined by the authors based on their knowledge on the subject.The respondents, in all dimensions, had to evaluate their level of accordance with the statements in a scale from 1 (completely disagree) to 5 (completely agree).
To validate the questionnaire we performed a pre-test, in September 2013, with five business partners, which allowed us to improve the text and also to identify the adequate response time.The sampling method was non-random, since the individuals in the sample were chosen by convenience, showing immediate availability to participate in the survey.Trying to gather a sample with different business partners' profiles we chose to collect the data on the maximum number of business partners possible, asking for the filling of the questionnaire by email, through the COS (forwarding the email to the business partners, since their database was not made available) or directly to the email of the business partner, when known.The company staff expressed satisfaction about the making of the campaign i2 The company was responsive to the number of customers that joined the discount coupon. i3 The regular customers reacted naturally to the made the campaign. i4 With the making of the campaign there has been an increase in positive comments about the company. i5 Customers who used the coupon did not make a negative association between the discount granted and the quality of product / service.i6 The site of group buying company did not have wrong and/or incomplete information about my company. i7 The promotional campaign has improved the company's image in the eyes of customers.Customer return in the future crf1 In general, customers who used the campaign returned crf2 The percentage of customers who returned at least once again was satisfactory crf3 Most customers acquired in the campaign returned at least once again and paid the full price

Customers retention cr1
Most customers acquired in the promotional campaign remain current customers of the company cr2 The percentage of customers acquired in the campaign that still keep true to the company is satisfactory Repetition of the promotional campaign pr1 In my company we speak positively of the campaign and regard the possibility of repetition in the future.
pr2 My company is making a new promotional campaign through an online collective shopping system in the next 24 months.Recommendation of the promotional campaign pre1 I have recommended and/or will recommend this type of campaign to other companies and friends. pre2 The people in my company speak positively about the campaign to other people and friends who own companies.
The questionnaire was available online, in the SurveyMonkey platform, from September 9 to September 20, 2013.To increase the number of responses we directly asked the business partners, in their facilities in Lisbon, for the completion of the questionnaire.We gathered a sample of 38 business partners respondents with a majority of answers (57.1%) being given by the owner or manager of the firm.

C. Analyses
All analyses were performed using IBM SPSS Statistics 20.The data was imported from SurveyMonkey and validated for measurement errors, missing values and outliers.We begin the analyses with the characterization of the sample in regards to the profile of the business partner and the adherence to the promotional campaigns.We also use univariate descriptive analyses on the evaluation of effectiveness.Next, for each consequent, we evaluate its internal consistency with Cronbach's alpha (item crf3 was excluded).We find good consistency levels in all dimensions, varying between 0.768 (image effects) and 0.860 (repetition of the promotional campaign).Afterwards, each scale score was obtained calculating the items average.Lastly, using linear regression models, we analyse the relationship between each consequent and each dimension of effectiveness.

IV. RESULTS
The results are reported following the proposed research goals and hypotheses.Thus, first we analyse the global effectiveness of the promotional campaigns and afterwards we evaluate the influence of the financial, non-financial and global effectiveness on the different expected results of the campaigns.Prior to that we begin with a brief characterization of the sample.

A. Sample Characterization
The inquired business partners are characterized by being micro (62.9%) and small (37.1%) firms, in activity between 1 and 3 years (40%) and only 40% being in activity for more than 5 years.Regarding the industry, 37.1% are in the food industry while 34.3% are in the health, beauty and esthetic industry.Regarding the experience of the business partner using the campaigns of the COS we observe that most (44.7%) have been involved in more than 4 campaigns and that the majority (71.1%) has done the last campaign in less than 6 months.Groupon (26.3%), the Cuponline (10.5%) and Odisseias (10.5%) are the preferred firms chosen for the campaigns.However, the initiative to execute the last campaign belonged in majority (52.6%) to the COS firm.
Moreover, the sites chosen by the business partners to do their last campaigns are characterized by being national (68.4%) and having general purpose (94.7%).

B. Evaluation of effectiveness
The business partners tend to perceive the non-financial effectiveness of the last campaign (M=7.03;SD=2.15), but not its financial effectiveness (M=4.75;SD=2.03), as presented in Table III.Still, despite these results, the global effectiveness presents an average value of 6.53 (SD=1.94),more influenced by the non-financial dimension (Pearson=0.844)than by the financial one (Pearson=0.678).From these results we expect effectiveness to have an impact on its consequents, namely on the non-financial ones.

C. Effectiveness and its Consequents
Table IV shows the summary statistics of each consequent.In general, the business partners consider that the promotion campaigns have positive effects in a long-term perspective (average values between 3 and 4).On average terms, the image of the partners is the one that most benefits from campaigns and the return and retention of the customers the ones that do not benefit a lot.To test the research hypotheses we estimate 12 regression models, two for each consequent of effectiveness.The first has the global effectiveness as independent variable while the second has the financial and non-financial effectiveness (see Table V).Regarding global effectiveness the results show that it is a good predictor of all the consequents, contributing more to explain promotion recommendation by business partners (adjusted R 2 of 60.8%) and image effects (adjusted R 2 of 60.6%), and less to explain the word-of-mouth by the business partners customers (adjusted R 2 of 15.9%).Moreover, all the significant relationships between global effectiveness and each consequent are positive, revealing the importance of the campaigns to be effective from the perspective of the business partners, in order to be repeated and recommended to other potential partners.
When analysing the individual effectiveness dimensions we find that the financial effectiveness is not a good determinant of any of the consequents, which is in line with the previous conclusion that the financial effective of the campaigns was low.When considering the non-financial effectiveness we find it to be a good predictor of all the consequents, with less explaining power on the repetition of the promotional campaign (adjusted R 2 of 24.5%).
The relationships between effectiveness (global, financial and non-financial) and its consequents can be observed in Figure I.The standardized coefficients obtained from the linear regressions are presented when statistically significant.These values indicate the effect, on average, on the dependent variable when the independent variable changes by one standard deviation.For example, the standardized coefficient associated with the relationship between global effectiveness and the promotion recommendation (0.788) means that a change by one standard deviation in the global effectiveness leads, on average, to a change in the same direction on the promotion recommendation by 0.788 standard deviations.
From the results obtained we conclude that all six research hypotheses are verified.The global effectiveness, highly influenced by the non-financial effectiveness, tends to contribute in a positive way to an increase in the word-of-mouth of the business partners' customers, to a better image and to client loyalty, with higher levels of retention and returning of customers.In the same way, global and non-financial effectiveness positively impact on the decisions by the business partners to repeat and recommend the promotional campaigns.This study intends to increase the understanding on the effectiveness of the promotional campaigns executed through the COS sites, to the business partners.Dholakia [6] and Gupta et al. [13] studied the profitability and the implications of the promotions from the perspective of the business partners.Dholakia [7] analyses the benefits and shortfalls of the daily promotions presented by the COS sites, like Groupon, for the retailers as for the final consumers.Erdogmus & Çiçek [8] and Liao et al. [20] studied the online shopping systems from the consumers' point of view.Thus, this study contributes to the research on the COS systems by analyzing the effectiveness of the promotional campaigns to the business partners and their consequents, in Portugal.
The results are mostly in line with the existing literature.The business partners of the COS sites are mostly small firms, belonging to the leisure, restaurants and beauty industries and with recent activity in the market.On the other hand, the sites chosen by the business partners for their last campaigns tend to be generalists, of national origin and with small differences in notoriety when compared to their competitors.
The effectiveness analysis of the last promotional campaign revealed that both at the global and non-financial level the promotion was effective.Conversely, at the financial level the promotion was not effective.The existing relationship between global effectiveness and the financial and non-financial dimensions is moderate for the former and strong for the latter, which means that to the global effectiveness of the promotional campaign the non-financial dimension is the one that most contributes to its effectiveness.Indeed, the results show that for the business partners, the effectiveness of the promotional campaigns done through the COS is, above all, related to the non-financial resources, as suggested by Dholakia [6] and Erdogmus & Çiçek [8].Regarding the consequents, the results are in line with Dholakia [6].According to the business partners, the effectiveness positively influences the level of word-ofmouth, the impact on image, the retention and returning rates of customers, and the repetition and recommendation of the promotion.We should point out that these positive relationships are only verified for the global and non-financial effectiveness.
Overall, this study helps the business partners to better evaluate the impact on the business from a promotional campaign performed through a COS site, allowing for a better decision regarding whether or not to join this type of initiatives.From the perspective of the COS firms, this research allows them to observe the perception that the business partners have on past promotions, and helps the streamlining of objectives from both parties since this is essential to the sustainability of the COS system.A deeper understanding on the consequents of effectiveness in online businesses can also be gathered from this study.Moreover, the research suggests ways to measure the consequents that evaluate effectiveness on this specific online business area.From all of this, we can achieve a better understanding of the COS business model and some of its critical success factors.
The main limitation of this research is the small sample size, since the results may not be generalized.For future research we suggest the analysis of the relevance of COS from a consumer perspective.AGRADECIMENTO À FCT-Fundação para a Ciência e Tecnologia, pelo apoio no âmbito do projeto estratégico UID/GES/00315/2013

H1:
Effectiveness positively influences the level of the word-of-mouth achieved.H2: Effectiveness positively influences the image of the business partner.H3: Effectiveness positively influences the customer return in the future.H4: Effectiveness positively influences customer retention.H5: Effectiveness positively influences the repetition of the promotional campaign by the business partners.H6: Effectiveness positively influences the recommendation of the promotional campaign by the business partners.

TABLE I .
QUESTIONS TO EVALUATE THE FINANCIAL, NON-FINANCIAL AND GLOBAL EFFECTIVENESS

TABLE II .
STATEMENTS TO EVALUATE THE CONSEQUENTS OF EFFECTIVENESS

TABLE III .
SUMMARY STATISTICS OF THE EFFECTIVENESS

TABLE IV .
SUMMARY STATISTICS OF THE EFFECTIVENESS CONSEQUENTS

TABLE V .
REGRESSION RESULTS FOR THE EFFECTIVENESS CONSEQUENTS