Online coupons are increasing in popularity as consumers continue to look for ways to save in this down economy.  This is mostly focused on grocery and specialty retailes but will probably move into all corners of retail.

According to a study by Simmons Market Research Bureau, 40 million coupons were printed from online sites which is a 20% increase from last year.  The other difference was a 46% increase of the use of online coupons by people who do not use printed coupons from newspapers.

There are a couple advantages of online coupons.  They can reach people when the population density does not warrent a direct mail approach and they number of coupons distributed can be controlled by removing the coupons when the downloads reach a defined level.

There are three models the are prevalent currently;

• Printable coupons that consumers  find and print online and take to the store for redemption. This is the most popular and most familiar to the widest number of users.
• Some large retailers wih loyalty cards, allow the coupons to be deposited on those cards whice are then credited at checkont.
• An alternative to this is to have the coupons uploaded to customers cell phones which can be scanned at the register.  This will probably have some resonance with the younger iPhone users but may not have as much acceptance with the Baby Boomer generation.

The economy continues to fuel the search for discounts but consumer are still concerned with reducing their ecological footprint and see paper coupons as a waste.  So other models will continue to grow in popularity. So we will see the growth in e-coupons. 

For online retailers, there is the dual challenge.  First is to get thier coupons in front of consumers and second to get these consumers to acknowledge the online retailer is a good alternative to going to the brick and  morter store.

This will continue to be a challenge.  First, there is little recognition in regard to the trade-off between the cost of traveling to the store and shipping charges so consumers have the view that the online alternative with shipping costs is more expensive.  To offset this most online retailers reduce prices (and ofter margins) to get consumers attention.  Second, is getting recognition that coupons can be easily used with online purchases.  Not all shopping carts make this feature obvious or easy to use.  And third, is online retailers have to develop reputations for competitive pricing, support for thier products and great customer service that is as good or better than any brick and mortar alternative.

So small online retailers will have to be in tune with emerging trends in couponing and combine this with innovative marketing to get recognized by consumers as the better alternative.  Those that do this will not only hang on during these difficult times but will do quite well.