Out-Law News | 11 Jan 2007 | 6:22 pm | 3 min. read
If anyone compiles a top ten list of internet cock-ups for 2006, Threshers' discount voucher will surely rank high. But it could also top the list of all-time viral marketing triumphs.
When I first received the voucher, promising 40 per cent off all wine and Champagne at any of the alcohol retailers’ branches, I was cynical enough to run a Google search for "Threshers discount hoax". It was not a hoax, though the official line from Threshers HQ seemed to be that it was a gaffe: the company said it neither intended nor anticipated the reaction.
The offer was intended as a "thank you" to suppliers, it said. Threshers invited them to pass on the voucher to "friends and family", but the voucher was posted to a blog run by Stormhoek, a South African supplier, as a free download and spread like wildfire by email. Media coverage increased the momentum.
At least Threshers wasn’t offering to give the booze away. That distinguished it from another of the year's internet blunders, when Starbucks emailed a free drink voucher to staff in the south-eastern US with instructions to forward it to family and friends. The company refused to accommodate the inevitable stampede. A class action lawsuit followed, claiming $114 million.
If Threshers risked losing significant sums of cash it could refuse to serve customers. That would upset shoppers and do the company's reputation no favours. But there would be no risk of million-dollar lawsuits. Customers might have grounds to sue, since each voucher is, in a legal sense, more like an offer than an invitation to treat. But the conditions limit sales to £500 and class action lawsuits are alien to UK courts. Suing would be a waste of money.
Instead, Threshers' reaction was sensible: it quickly admitted a mistake and it promised to honour the vouchers.
The 40 per cent discount is generous, but this is a shop that has long promoted a three-for-two offer on all wine and Champagne (and the voucher won't work in conjunction with that offer or any other discount). That basically means a 33 per cent discount has become a 40 per cent discount.
I have no idea what mark-up Threshers applies, which makes it impossible to measure the damage of that extra 7 per cent, but an unscientific price comparison suggests its standard prices are high: a bottle of Veuve Clicquot Non-Vintage Champagne is £35.99 in my local branch. Across the road, rival Oddbins sells the same bottle for £27.99, while Sainsbury’s has it for £25.64. With the voucher, Threshers is selling it for £21.60.
A spokesman for Threshers has said that the company expects its margins to take a hit but it does not expect to make a loss. A lower margin is compensated by higher sales and Threshers' sales are surely going through the roof. Countless voucher-holders will stock up for the festive season before the offer expires on December 10 and presumably some will buy non-discounted beer and spirits at the same time. First-time visitors may change allegiances. It all sounds like a marketing success story without a marketing budget.
I don’t think this was a cunning plan: Threshers' own website was crushed by the stampede and it stayed down for several days, leaving many voucher holders unable to locate their nearest branch. Also, the voucher requests visitors' names and email addresses but forgets to say that, in using the voucher, they consent to marketing by email.
The sales assistant at my local branch told me she was run off her feet and she blamed the offer, not the time of year. As I handed over my voucher to buy a bargain bottle of Stormhoek, she showed me a two-inch stack of vouchers already received. She didn't know the shop's profit margin, but reckoned the promotion was likely down to "either a genius or an idiot at head office". If there is any profit margin at all, I'd put it down to an act of accidental genius.
By Struan Robertson, Editor of OUT-LAW. This opinion piece first appeared in Struan's regular column for Times Online.