40% of Groupon merchants say "never again"
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40% of Groupon merchants say "never again"
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Re: 40% of Groupon merchants say "never again"
#2How is this any different than a company posting a 50% off coupon in their local newspaper? Groupon is just a different advertising route. I'm not sure why Groupon is being blamed for what follows after customers get the coupon in their hands.
Re: 40% of Groupon merchants say "never again"
#3If 60% of their customers want to participate on a regular basis then that's more than enough to build a billion dollar business. I don't see where the scandal is.
Re: 40% of Groupon merchants say "never again"
#4A customer who takes a common deal on Groupon is highly unlikely to go back to a business. At least here in the UK, Groupon's deals are all the same - restaurants, teeth whitening, facials (it just doesn't seem right typing that) and haircuts.
I can guarantee that there's going to be a teeth whitening deal every week - so why would I ever go back to a dentist and pay full price? Long term, these businesses are damaging their markets and industries. You'll struggle to build a business from fickle, deal-hunting customers.
That said, with things that are unusual I think Groupon is a good solution - a canoe trip, or climbing wall for example. There's less competition and it's a great way for people to try something that they might grow to love. But restaurants - come on!
It's like the reverse of a loyalty card - come again and we'll charge you double.
Re: 40% of Groupon merchants say "never again"
#5How is this any different than a company posting a 50% off coupon in their local newspaper? Groupon is just a different advertising route. I'm not sure why Groupon is being blamed for what follows after customers get the coupon in their hands.
The key differences I see are:
* Groupon takes a large cut of the coupon purchase cost - up to 100% if Posies Cafe is to be believed. So it's more like a 80-100% off coupon as far as the shop is concerned.
* All income is realized up front. Costs of the promotion are going to be known 100% and quickly after the "coupon" is printed. The actual impact of that could be spread over a long period of time.
* People feel obligated to use the coupon because they paid money for it. I'm sure the redemption rate is a lot higher on Groupons - it feels like an awesome deal when you buy, it has the urgency of time running out so people are more likely to buy if they are on the fence, and then they want to spend the bought coupon, because otherwise it's lost money.
If you can get around the (allegedly) absurd Groupon cut (which it looks like you can with negotiation), and you can price your discount so that you break even, Groupon could be a great way to drive business. The only thing Groupon is doing that seems even slightly "evil" is the high cut, but any business owner should look at that and make a decision based on the numbers and either negotiate a better cut or walk away.
But while Groupon might be a great way to drive business, I'm not convinced it's a good way to drive GOOD business for all businesses. The site draws extreme bargain hunters, and those are the sort of people that are not going to be loyal and aren't likely to come back without a coupon.
So I'd say that the blame is even more on the business owners if a Groupon goes wrong. The fact they know their total maximum liability before they even start the process makes this even better than a newspaper coupon campaign. With the tools they have at their disposal (not doing the groupon, negotiating the cut, setting a max number of sales), they are to blame if they lose money on the deal.
It sounds like (from the article) that most companies manage that aspect ok, they just don't realize how bad a set of customers they are going to get out of Groupon. That's purely the numbers influencing them into running the campaign, but if they broke even, then so be it. They can just mark it as a lesson learned and move on.
Re: 40% of Groupon merchants say "never again"
#6How is this any different than a company posting a 50% off coupon in their local newspaper? Groupon is just a different advertising route. I'm not sure why Groupon is being blamed for what follows after customers get the coupon in their hands.
Groupon takes a far larger cut than the local newspaper would.
Re: 40% of Groupon merchants say "never again"
#7How is this any different than a company posting a 50% off coupon in their local newspaper? Groupon is just a different advertising route. I'm not sure why Groupon is being blamed for what follows after customers get the coupon in their hands.
It's very different. When was the last time you cut off a coupon from your local newspaper (I don't even know the name of mine -> Google -> Oh, it's Daily Herald, cool!), saved it in your wallet and used it in the store a couple of days later?
Groupon's difference is: (i) it's on the internet, fueled with great publicity it has generated (ii) the brilliant social aspect of the groupon system and (iii) the deal is instantly bought now, not later. So it's not a coupon at all but a web-based deal.
Groupon is very good at creating hoards of customers; what it lacks, I think, is the consultation that should be provided to businesses about how to limit and handle the crowd. Even gap.com had a rough day when Groupon unleashed a national campaign recently.
Re: 40% of Groupon merchants say "never again"
#8If 60% of their customers want to participate on a regular basis then that's more than enough to build a billion dollar business. I don't see where the scandal is.
considering the story itself is debatable and, in my opinion the consequence of unprepared owners, the 60% stat is actually what I found most interesting (given that they've repeatedly thrown around the 97% number, which is staggering)
Re: 40% of Groupon merchants say "never again"
#9"It smacks of a desperate attempt to jump on the trend-wagon and less of a well-thought out marketing move and that is the real crux of the problem."
I wouldn't be so quick to judge if I were the writer. This will just be one of many discoveries as this type of business grows and gains in popularity, and I have no doubt they will learn and react with their best judgment.
Re: 40% of Groupon merchants say "never again"
#10I'm a physical goods retailer and I'd like to point out a bit of group-think on HN's part. 3 months ago, I asked you guys if I should use a Groupon clone (http://news.ycombinator.com/item?id=1490096) and I got overwhelmingly positive responses (someone even called my concerns paranoid). Now the place is littered with negative attitudes toward Groupon. I don't think the facts underpinning my worries have changed, only the community's attitude.