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Groupon’s Success Disaster

blog.redfin.com

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Re: Groupon’s Success Disaster

#111

Post by igravious »

igravious wrote: post #79
clistctrl wrote: post #32

Earlier quoted context omitted.

I'm OK with redfin submitting their own post as I found this particular entry to be interesting, and thought provoking.

I'm not. I didn't.

So let's get this nice and clear.

clistctrl says that he is okay with a company submitting their own content and that he found this particular entry to be interesting, and thought-provoking and he get up-modded.

I in my inimitable curt way say that I am not okay with that practice (I'm not okay with it, I think posts should be submitted independently or at least with full disclosure) and I state that I don't find it to be interesting and thought-provoking and I get down-modded.

What I want to know is - why is it not okay to express a contrary opinion? Why is taking an opposite stance in this case worthy of being down-modded. If you don't agree with me you can leave my post unchanged in value. But everybody who has down-modded me is saying that you don't want to see and won't tolerate dissenting voices. I haven't been rude, I haven't spammed, I've contributed some valuable comments and opinions in the past on this site. I'll say it again: SlashDot for all its warts was never like this.

Re: Groupon’s Success Disaster

#112

Post by igravious »

cullenking wrote: post #84
igravious wrote: post #10

Who is GlennKelman and why is he/shey only submitting redfin articles and who are redfin and why are the articles deliberately contrarian and who is upvoting them?

Have you not realized that a decent amount of the users on HN are successful entrepreneurs? If you ever become a successful entrepreneur, and have some good information to share, are venues like HN off limits? What people like Glenn Kelman are doing is offering valuable information in return for name recognition. I "purchase" their information by enjoying it and sharing it with others, which returns value for the ori…

>

Yes I have realized that - it's hard not to notice that.

>

Of course they are not off limits. But my expectations are usually that the submitter is some random web-surfer. I think that if the submitter discloses that they are affiliated with or actually are the author then that's cool. By the way, I don't think "Bill Gates, My Hero" is good or valuable information. Similarly I do not find that this article contains good or valuable info, it's just zeitgeisty and filled with folksy homespun truths. In fact the two posts, posted one day after another seem designed to generate discusion for discussion's sake and feel like a cynical ploy to push traffic to the site.

>

I don't understand you here. We "purchase" nothing. We are being used as a commodity when someone uses the collective traffic we generate for hits or clicks. What name recognition? If I find some tech interesting I'll take note of the company or author but that's how life works. Name recognition for its own sake is meaningless.

>

It would be if someone else found it valuable or interesting. That's the way these things work. I have no idea if an article by the CEO or an employee of a company gets upvoted purely because of who they are and not because of what the content of the submission is.

>

But as you say yourself it may have been read so there would have been no loss so no need to worry there then I guess.

>

That's great but that's neither here nor there in relation to my original complaint. You know I actually probably enjoy reading more or less the same stuff as you. In this case, alarm bells went off in my head - I'm sharing that sentiment with you.

Re: Groupon’s Success Disaster

#113

Post by igravious »

Splines wrote: post #82
igravious wrote: post #78

Earlier quoted context omitted.

You know I'm getting sick of the downvoting to the depths of hell any post that crosses the group-think party line of this place. I don't think that it is okay that a CEO of a commercial site is cross-posting here to boost traffic to his website. So what if you've used their services in your personal life and found them useful? How does change anything? My expectation of a site like HackeNews and SlashDot or anywhere…

I guess I misunderstood your original post. It sounded like you didn't know who the poster was, and I looked it up for you and shared some context of my experiences with them. Personally, I do think it's ok that a CEO is posting here, even if it is for financial gain. I feel like this site is like a tech-news link aggregator with a business spin. Having a CEO of any company is (I think) of value to the community sinc…

I didn't. I looked at their user info and it says nothing - says it was created 9 days ago and the user only submitted 2 redfin articles and nothing else. Normally entrepreneurs and CEOs round here write a short note that they are the founder or CEO or whatever. I didn't put 2 and 2 together. Mae Culpa. But do I now have to double check every submission? Wouldn't it be "normal" to say that you're affiliated if you're affiliated. My hunch says yes.

Personally, I don't think it's ok that a CEO posts here for financial gain - I don't like that motive and I don't like in what direction it would take this site. I feel like this site is like a tech-news link aggregator with a entrepeneurial spin. I don't think it should be used by established businesses to boost traffic. Yes haveing a CEO of any company is of value to the community but only if they are here on merit, and not if they try to manipulate the community.

Like I have said again and again, it is neither here nor there if I agree or disagree with the article - the discussion I want to have is that I think this one: this guy when he submits 2 posts (written by himself on a corporate blog!) one day after another on topics that are guaranteed to cause a stir is cynically trying to boost traffic plain and simple. I don't want up-votes, I just think it speaks of the mob mentality and group-think on HN that you can't dissent or point something out like this without being down-modded.

I am taking it is. Thanks for taking so much time to respond. I hope you see my point of view. I don't see why I keep getting down-modded for it. You seem reasonable and if you say you feel this kind of thing is fine then I'll certainly take you opinion into account and I feel like you're the type of person who would extend me the same courtesy.

Phew!

Re: Groupon’s Success Disaster

#114

Post by mtr »

wiredfool wrote: post #77
reitzensteinm wrote: post #23

The numbers do not add up. Assuming 1,000 customers; $8,000 in losses is an $8 loss per customer. With $3 of revenue. So they're claiming $11 in variable costs to service each customer, for $13 worth of product. No way that is correct - if it is, Groupon is merely the straw that broke the camel's back. Their markup on product should be way higher. Also, that's assuming no increase in follow on transactions, and that…

What I learned in food service is that a general formula is 30% food cost, 30% labor, 30% overhead, 10% profit. If things are running well, you take home some money at the end of the day. The margin for error isn't huge.

So assuming that these customers didn't buy anything over $13, her COGS should have been $13 * 0.3 = $3.90. This also ignores the fact that there are people who paid $6 for the coupon and never redeemed it.

Now lets assume that some people didn't redeem the coupon and that her COGS is a bit lower, so COGS = revenue. As labor and overhead are 'fixed', she shouldn't have lost any money as long as these weren't existing customers who decided to use the coupon.

If 100% of her existing customers used the coupon she certainly would have seen her profits hurt. If 100% of these people were new to the business, she wouldn't have made/lost any money on each transaction, but she would have obtained a lot more exposure.

So before deciding to do one of these deals a business owner needs to have a clear handle on their costs, the expected mix of new/existing customers, and the expected revenue from the new customers over some reasonable length of time.

Re: Groupon’s Success Disaster

#115

Post by Kadrith »

adbachman wrote: post #93
nathanwdavis wrote: post #73

Earlier quoted context omitted.

Angie's List (my company) has created a similar group coupon system (The Big Deal) as Groupon, but targeted to a more niche market. We actually allow companies to set a hard limit on the number of coupons that can get sold. This allows businesses to offer really great deals that they expect may do negative revenue just to bring in new customers, but control the loss with the limit. I'm surprised Groupon doesn't do th…

They do not set a limit, or at least didn't in this case. "When I talked to Lucinda today, she asked if there was a cap on how many were sold to help protect the business from too much loss, and the simple answer is, no. When you sign up for Groupon, you are agreeing to sell as many as get sold."

I thought the merchant was able to set a limit, if they choose to. Or am I wrong?

Re: Groupon’s Success Disaster

#117

Post by MicahWedemeyer »

jojomagictime wrote: post #97

I work for a Skydiving company that has, to GREAT success, ran two GroupOn promotions. We sell three different types of jumps, 10k 15k and 18k. The 10k goes for $169 and is out of a 5 seat Cessna, available only on some weekends. The 15k and 18k are available weekends and most weekdays and cost $199 and $259. Our 15k and 18k jumps are out of a large, 15 seat aircraft. We sold 10k jumps for $99. The COGS for this prod…

Good job on crunching the numbers and making it profitable. Groupon is definitely a win-win in some cases.

Did the Groupon people help you with all this, or did you have to figure it out yourself? My main complaint is that Groupon doesn't seem to be looking out for the small biz owners and steering them toward successful deals. It sucks to feel like you can't rely on a partner to look out for your interests.

Re: Groupon’s Success Disaster

#118

Post by webwright »

igravious wrote: post #81
webwright wrote: post #30

Earlier quoted context omitted.

Glenn also won a "best startup blogger" award in seattle. He's got some really fabulous posts.

That may be, but that does not address my complaint.

Yeah, your complaint is honestly kind of ridiculous. Contrarian viewpoints get eyeballs. This site (and many like it) welcome opinions from startup bloggers. This wasn't my favorite post by this author, but it was an interesting read and certainly topical.

Re: Groupon’s Success Disaster

#119

Post by smackfu »

reitzensteinm wrote: post #45
jlees wrote: post #40

Earlier quoted context omitted.

The item they're selling for $13 could be a low/zero margin product usually used to bait further purchases or tips. Another issue they noted was people not tipping as if they had paid $13, but tipping as if they had paid $3.

That would explain it - however, what items fit that profile in a coffee shop? Certainly I can't think of anything from my local. The tipping is a legitimate issue, however, I bet there are people that spent less than the full value of the coupon, tipping the scales back in the other direction, so I believe my back of the napkin analysis stands.

Coffee shops are interesting because the food / pastries are low-margin while the coffee is high-margin. And people are much more likely to just buy coffee than to just buy a pastry. So as your average check increases, your margins go down.

Re: Groupon’s Success Disaster

#120

Post by clistctrl »

igravious wrote: post #111
igravious wrote: post #79

Earlier quoted context omitted.

I'm not. I didn't.

So let's get this nice and clear. clistctrl says that he is okay with a company submitting their own content and that he found this particular entry to be interesting, and thought-provoking and he get up-modded. I in my inimitable curt way say that I am not okay with that practice (I'm not okay with it, I think posts should be submitted independently or at least with full disclosure) and I state that I don't find it…

Its not only okay to express a contrary opinion, but encouraged. However a short brief post with no further details does not provide any extra value to the conversation. I believe this is why you were voted down previously.
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