The theory behind Internet coupons is the same as that of its low-tech counterpart, the shopping coupons delivered in the weekly advertiser. Internet coupons offer a considerable discount to the buyer in order to get him or her to try the product or the retailer. They offer real shopper savings, sometimes as much as 25 to 30% and allow the consumer to try something her or she may have been considering at a more attractive price that makes the purchase not so risky. For retailers, coupon distribution and use does result in higher sales volume but also cuts into the profit margin, making them a generator of turnover but not necessarily increased profit. However, most online retailers think any disadvantage is offset by the usefulness of coupons as a marketing and advertising tool. Coupons are popular with Internet users and they do bring shoppers in to the virtual stores. One Internet market research firm estimates that 40% of U.S. online shoppers use Internet coupons.



Internet coupons may have increased value when used as a market research tool. Coupons are an easy way to track the popularity of items and programs. The can be a good indicator of the online marketplace in general. Manufactures are beginning to value online coupons as a measurement device in market research. Retailers are beginning to see different strategies behind Internet coupon use particularly in the way in which they are distributed.

As with all coupon use, different distribution strategies will produce different results. A coupon site that distributes percent off coupons will indubitably draw shoppers interested in lowed price and getting a bargain. But a bargain hunter may not be the type of consumer that some retailers find most attractive. These retailers may find that when coupons are offered as a response to a sales transaction or in tandem with registration at a retailer's website, it can result in attracting a different kind of consumer, one who represents repeat business. Used in this way, the coupon distribution policy can be a first step toward a customer loyalty program.

This is more attractive to a retailer who sees the coupon sale not as a one-time sale that lowers his profit margin, but as a reduced sale that creates incentive and a base of loyal customers that will represent return sales. Coupon use in this fashion becomes akin to a promotional offer aimed at promoting future business and growth of the business. With this more targeted use of Internet coupons, both the retailer and customer can profit in the long run. From the customer's perspective, he has tried a new product and Internet retailer. He has been rewarded with a discount coupon for his purchase and knows where to return for a fair deal when making future purchases. He has reason to suspect he will receive an attractive price in the future. For the retailer, the use of Internet coupons has resulted in a solid Internet advertising campaign since the best advertisement, in any retailer situation, is a satisfied customer.