Groupon - Bad for Businesses?

[cman]

http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/

 

Interesting article on Groupon. It seems like i get a call every week from some site i have never heard of "we are like groupon", and have wondered how many of these deals can businesses really sustain. The proliferation of these deals can't really be good for many businesses long term.

I know lots of consumers love these deals, and buy them all the time. I don't think Groupon is going out of business or anything like that but it does seem like the whole phenomenon is way over-hyped as being some kind of marketing revolution for businesses.

Maybe with increase competition businesses will get a higher share of their groupon (when i talked to them they wanted us to sell a $50 product for 1/2 price, $25, and then we would get only 1/2 of that, basically selling a $50 product for $12.50) but long term businesses need to get more $ and control out of these deals to benefit themselves.

 

or maybe i am just a groupon-hater...

[E-rock]

We used them recently for a beer store in town. The business claims that almost everyone overspends the value of their groupon (since you're only allowed 1 per person per transaction). So the business makes back a little more than the groupon netted them, plus, theoretically they get new business. At least that's the line we recieved from the beer store, my wife was concerned that we were ripping them off.

 

 

Also, my experience has been that the Groupon buzz is greatest over a place that is already popular. Everyone I know who already shopped regularly at the beer store in question emailed each other in a frenzy the day the sale started.

Edited June 17, 2011 by E-rock

[bstach]

Whats a Groupon? It sounds delightfully naughty.

[JayB]

Seems like a key function of any viable business is the ability to independently determine whether something is or isn't good for the said business.

 

 

[Hugh Conway]

Seems like a key function of any viable business is the ability to independently determine whether something is or isn't good for the said business.

 

Comeon Jay you aren't this dogmatic are you? Where does a business owner find information on the viability of a new method of promotions? Shit, most small business owners I know don't have the time to do in depth cube monkey level research.

 

We used them recently for a beer store in town. The business claims that almost everyone overspends the value of their groupon (since you're only allowed 1 per person per transaction).

 

Per this paper:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1863466

and my personal experience, that's rare. I'd be particularly surprised at a liquor/beer store.

 

anyways, groupon as a company is a scam

[eldiente]

GroupOn is a giant Ponzi scheme, they lose hundreds of millions of dollars every year and are nowhere near profitable. Check out their IPO financial statements, they take in tons of cash but spend it all on marketing to the point that they are very much in the red. Investors are keeping their doors open by pumping cash into the bizz.

 

For the local business it can be a double edged sword. The GroupOn for Casa Naranja expired on Thursday so half of Portland was there trying to eat. They ran out of beer, half the menu items were unavailable because they ran out of food (!?) the wait staff was rude because they were slammed busy serving cheap-skate Portlanders, and the Fries took an hour to come out. So yeah all that traffic is nice, but now I just wrote a negative review of them online and probably won't be going back.

 

I did buy the GroupOn for the body wax, I'm real smooth now.

 

 

 

 

Edited June 17, 2011 by eldiente

[billcoe]

I did buy the GroupOn for the body wax, I'm real smooth now.

 

"HALF OFF ALL BACK HAIR".....

[cman]

That is a very in depth paper, well worth a read. i definitely agree with the conclusions they come to. I think a lot of small businesses sign up for these and only realize later what the real cost and impact of these groupons are.

 

If i could get in on the IPO i would probably buy some shares. i'll bet the hype will drive up the share price on day one, before falling on day two.

[JayB]

Seems like a key function of any viable business is the ability to independently determine whether something is or isn't good for the said business.

 

Comeon Jay you aren't this dogmatic are you? Where does a business owner find information on the viability of a new method of promotions? Shit, most small business owners I know don't have the time to do in depth cube monkey level research.

 

We used them recently for a beer store in town. The business claims that almost everyone overspends the value of their groupon (since you're only allowed 1 per person per transaction).

 

Per this paper:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1863466

and my personal experience, that's rare. I'd be particularly surprised at a liquor/beer store.

 

anyways, groupon as a company is a scam

 

Trial and error. Bet the farm on a single If you're the the type that will be the farm on a single Groupon promo you will probably be out of business soon anyways..

[Hugh Conway]

Yes jay, it's trial and error and like o many things in life it's not perfectly deterministic. Most small businesses succeed with a little luck - probably because most small business owners are passionate about what they do first, and the business part comes later.

 

 

Of course if you've read about groupon you'd realize that merchants, in part because of groupon policies and capriciousness, may be unwittingly betting the farm.

 

 

Interesting post on the legal risks for groupon.

http://www.wired.com/epicenter/2011/06/groupon-risks-and-gifts/

[Julian]

I'd never heard of Groupon before their disgustingly tasteless "Tibet suffers under Chinese rule but at least you can still get their ethnic food!" commercial they ran during the Super Bowl, and after seeing that I've vowed never to use their business.

[Hugh Conway]

I'd never heard of Groupon before their disgustingly tasteless "Tibet suffers under Chinese rule but at least you can still get their ethnic food!" commercial they ran during the Super Bowl, and after seeing that I've vowed never to use their business.

 

Heh. The best part about that stupid add was their response to it "you just didn't get the joke" .... funny because the joke wasn't really funny if you got it.