Groupon Gone Bad

14 years ago

Hey

found the story particularly interesting, especially as it happened to a business local to me. I thought it was possible to limit the number of deals ?,

Thanks
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BradleyC 14 years ago

I found the story interesting and pursued it a bit further and found this ... https://plus.google.com/107945426404...ts/4a5bH8Y27Wt

Apparently this has happened to numerous businesses.

Bradley
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Thaddeus

14 years ago

Feel sorry for the business at the heart of it, but it must be possible to turn this round into a PR victory at the same time they are working to deliver those cakes. (Whether that PR victory will materialise hard new business is another thing.)

What I want to know is whether anyone has used Groupon to sell a digital download. Seems perfect for situations like that, where there is no stock to be carried.

Thanks
1 reply

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GIahGroup

14 years ago

Groupon has almost killed thousands of small businesses, basically businesses sell products / services at 50% but only get 50% of that ie: 75% off.

Not good for a business that has fixed costs involved and provide actual products, although it does suit service type businesses where they only provide time and fixed costs are the same ie: group personal trainers etc.

A good opportunity though to help those businesses recover from Groupon.

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MichaelParsons

14 years ago

Originally Posted by GIahGroup

Groupon has almost killed thousands of small businesses, basically businesses sell products / services at 50% but only get 50% of that ie: 75% off.

Not good for a business that has fixed costs involved and provide actual products, although it does suit service type businesses where they only provide time and fixed costs are the same ie: group personal trainers etc.

A good opportunity though to help those businesses recover from Groupon.

I agree, Groupon is damaging businesses by having them move $100 of product and only getting $25 for that product. Especially agree with the opportunity to help them recover.

However, a business owner who does NOT know this is, as someone cleverly said, A MUPPET.

Anyone jumping in to this without understanding the ramifications of their actions, or the money they could lose, is not conducting business properly.

Sure, I've made mistakes, but NOT DOING THE MATH on something like this? Really...

LOL 75% discount. Fool.

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Fernando Veloso

14 years ago

Groupon isn't killing business - dumb business owners are.

Fact is they know quite well big brands like Groupon come up, make some damages and go down. They know this very well, it's going on for ages. But instead of learning from it, business owners keep on trashing people with GOOD knowledge and that factually can bring them more customers, and they prefer to invest their money in suicidal marketing plans in a big corporation with all the bells and whistles.

Like the sea pushes out what doesn't belong to the sea, guess the business world is doing the same.

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jimbo13 14 years ago

Like Philboy above, whom I know, this lady is down the road from us. 8 miles him 1 mile me.

There was nothing wrong with Groupon at all.

The piece is actually good for them. Proves they can drive an absolute avalanche of business your way without any upfront costs unlike any other form of media advertising.

The problem was her being a muppet.

She was greedy. She actually wanted Groupon to run it nationally and they told her to scale it back to regional only.

They also offered her the free online software to monitor bookings which she declined.

Exactly the same happened to a pub down the road. It has 15 covers and asked Groupon to run a full regional campaign thinking maybe 30 or 40 would take it. 1236 did.

Groupon explicitly told them that it would be in the hundreds but they didn't care and now they have had to employ someone to field all the angry calls.

Groupon can only advise on capacity, it is the businesses job to make sure the figures stack up and are deliverable.

It is called Stress Testing. What if xyz happens? Can we abc?

Dan
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- BradleyC 14 years ago
  
  It's interesting how I seem to be running across all of these Groupon articles. Here's another one I found informative ...
  Beyond Groupon: Daily Deals Evolve, New Competitors Emerge
  
  It talks about other companies who are trying to follow the Groupon business model, problems with the model and other interesting things. For those of us working with local businesses day in and day out, this is a good article to share with them. For example, here's one of the paragraphs in the article ...
  With the Groupon model, to actually boost a business's bottom line, the thinking goes, daily deals need to attract at least one of two types of customers: Those who spend more than a coupon's face value and those who return after redeeming the deal. But recent research reveals that group-buying services often fail to serve up either kind of customer.
  
  As marketers, there are ways to turn a Groupon deal into a winning solution IF it's put in place PRIOR to the Groupon coupon being sent out.
  
  Enjoy.
  
  Bradley
  
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- dealmonster 14 years ago
  
  Why blame Groupon if they are driving more business than you can handle? It is a good problem to have. Businesses always have a choice to limit the number of coupons, Groupon can sell.
  Having said that we follow the traditional deal promotion on our site - UPto75.com. We use more pull strategies than push. So our merchants will be spared from getting a deluge of customers in a very short period of time
  
  Thanks
  
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sadiecopywriter

14 years ago

I heard a story one time, (couldn't find it again though.) where a massage parlor offered a 30 minute massage though groupon and got over 1500 people.

However, (this was the clever part...) they had a whole year to redeem their groupon coupon (so the place didn't get overwhelmed,) and when the groupon customers came in, they offered them and extra 15 minutes (so a total of 45 minutes,) in exchange for an email address.

I thought it was such a clever way to use Groupon and get emails.

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mjbmedia

14 years ago

Some business owners are too thick to run a business (properly).

Is that really Group-Ons fault?

No

Who cares what the media think, they'll print anything to keep away from printing about themselves hacking mobile phones pretending murdered people are still alive.

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Mike

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Aaron Doud

14 years ago

I think some businesses are so desperate for business that they try flawed markerting like this. Groupon can work. Personally I do not believe that most businesses truly benefit from the customers they get from groupon. Deal seekers are not always who you want. And people who buy from groupon repeatedly are simply deal chasers who are unlikely to become regular customers.

We have a local groupon clone and the only time I buy from them is when it is a place I already visit. So had that business been simply marketing to me more often with time sensitive deals via SMS they would get my business more often than the half price gift certificate did.

In fact I have gone to the one less since I got the certificate and still have not fully used it. So it didn't work for them in the sense of new business or getting me in the door more often. Where if they had and sms list they could send me a $2 off coupon that was good for 3 days and I would likely come in.

Less discount and yet more control.

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purehatred

14 years ago

Many can try out products at a discount through groupon and if they like the service - they will surely come for more next time. Groupon can help in many ways and can be of no use to some

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Charles Harper

14 years ago

Groupon is bad for business owners if

1.) they don't know and understand their basic margins and/or costs including what each prospect typically costs them and how much it costs them to acquire a customer in terms of advertising dollars.

2.) because they don't know #1) they offer the wrong deal

3.) even if they offer the right deal they don't understand what is common place on the Warrior Forum, and that is that the should be capturing names, email addresses and mobile numbers from each visitor.

4) they should be staffed effectively provided that they understand #1 and #2.

There is more to life than traffic and as a result, it is good that there are people like us to explain it to them. I don't think that GP does and adequate job of explaining the importance of using that traffic to build their list.

Those businesses that understand this are really taking advantage of this Christmas season, even if they have to deeply discount their products to survive. The recession will not last forever, and smart owners a loading up prospects into their database like shells in a shotgun.

CT

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vuongdo

14 years ago

Many bussiness went belong to Groupon, without Groupon they don't have customer. That's not good

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itzpaul

14 years ago

It is usually the business owners fault for getting too many customers and not being able to support it.

I would think a business could make it profitable if they think about it. They shouldn't offer so much of a discount and make it so they have to purchase X amount to receive a discount.

A businesses costs are all wholesale + time. There's room for profit if they make room.

Thanks

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Jimsim09

14 years ago

Many eager to earn more profits and without thinking about their business capability, that happened. I hope this is a good lesson for the cupcakes owner and other business owners. To do all the preparation for such thing to happen when you promote your business is groupon or any website that will give such spike on your sales.

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SGTech

14 years ago

Groupon only goes badly for those shortsighted enough to view the Groupon offer itself as the big reward. The big reward is actually in setting up a system to in collect the information of those people that bought their Groupon offer and turn them into recurring customers. Breaking even on your Groupon offer should be the initial goal with future profits being the endgame.

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Rus Sells

14 years ago

Oh yes Groupon is the monster here. LOL More like business owners having no business being in business is the problem here.

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Kunle Olomofe

14 years ago

Just throwing this out there... There might be a market for offline-based ecommerce consultants here... Target local companies who are already using Groupon or Groupon-type opportunities to market themselves. Offer to help them get much better results from their actions. You know build lists, following up, getting ready for lots of traffic, methods they can use to connect with existing and future clients etc... maybe even improving their websites, or getting them mobile sites and stuff... worth looking into.

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HypeText

14 years ago

Originally Posted by BradleyC

I know I haven't been on for a while. Business has been booming and my team and I have been swamped!

I ran across this tonight. It's a good read on how Groupon can really hurt a business. In business, too much business too fast can seriously hurt a business. Check it out ...

Groupon Cupcake Deal Floods Rachel Brown's Need A Cake Bakery With Thousands Of Orders

I hope everyone is tearing it apart out there.

Bradley

That is only one of many such stories about Groupon causing major problems for small business...

A recent study also showed that Groupon Buyers, a staggering 80% of them, never return to the business again.

Even Groupon is aware of this issue and as a result their revenue is down considerably for the end of December.

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Rus Sells

14 years ago

The fact the 80% don't return to buy again is the business owners fault 100%. They could greatly decrease that by capturing the groupon users information at the POS and re-market to them when they business has new specials.

The businesses aren't taking the proper steps to build a relationship with these buyers and therefor they have no good reason to return to make new purchases.

Because of our IM mentality we tend to blame Groupon for not educating them on this fact but the reality is, business owners should already know this stuff and its kind of shooting ones self in the foot if Groupon taught them these basic principles of marketing and customer vetting.

Of course Groupon could decide to help these business owners learn how to do this but that won't come free nor cheaply because then the business owner is less likely to do another deal therefor the charge would not be cheap. How many business owners do you think would pay? Most have inflated ego's and can't be told how to run or manage their business in the first place. Those are typically the ones on the internet complaining about how their Groupon deals ruined their business.

Originally Posted by HypeText

That is only one of many such stories about Groupon causing major problems for small business...

A recent study also showed that Groupon Buyers, a staggering 80% of them, never return to the business again.

Even Groupon is aware of this issue and as a result their revenue is down considerably for the end of December.

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HypeText

14 years ago

Originally Posted by Rus Sells

The fact the 80% don't return to buy again is the business owners fault 100%. They could greatly decrease that by capturing the groupon users information at the POS and re-market to them when they business has new specials.

The businesses aren't taking the proper steps to build a relationship with these buyers and therefor they have no good reason to return to make new purchases.

Because of our IM mentality we tend to blame Groupon for not educating them on this fact but the reality is, business owners should already know this stuff and its kind of shooting ones self in the foot if Groupon taught them these basic principles of marketing and customer vetting.

Of course Groupon could decide to help these business owners learn how to do this but that won't come free nor cheaply because then the business owner is less likely to do another deal therefor the charge would not be cheap. How many business owners do you think would pay? Most have inflated ego's and can't be told how to run or manage their business in the first place. Those are typically the ones on the internet complaining about how their Groupon deals ruined their business.

I totally agree....and actually greatly appreciate that it is that way...

It makes those daily deal merchants easy pickins for companies like mine because we provide the solution to that very problem!

The other issue that is prevalent is that Groupon is Greedy. They actually try to convince merchants not to limit the number of vouchers for sale because the more they sell the more Groupon makes.

This is what happened to the cupcake company. She followed Groupons advice and didnt cap the offering and ended up biting off more than she could chew.

Since most Groupon customers are first time customers they don't know what to expect in terms of response to their offers and Groupon is not entirely upfront about it. Sales Reps often don't disclose it because their commissions are affected by it.

Small Businesses are learning the hard way and thats why 70% of Businesses who participated in Groupon said they wouldnt be doing another offer anytime soon.

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Groupon Gone Bad

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