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40% of Groupon merchants say "never again"

marketingpilgrim.com

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Re: 40% of Groupon merchants say "never again"

#81

Post by lionhearted »

> What do you think of these numbers? Do you think Groupon’s satisfaction and return rate is closer to Mason’s 97% or 60% as the survey says?

60% happy rate certainly sounds closer to reality than 97%, but am I the only person who thinks that's really, really good? Are there any forms of media/advertising that first time purchasers have above a 60% rate? I've tried different kinds of media and deals in the past, and had many things go abysmally bad. Print in particular. I think mature industries like newspapers, magazines, and TV commercials only have a higher satisfaction rate because they attrition'ed out some people who attempted that form of media. Once people figure out what businesses perform really well on Groupon, success/satisfaction rates will go up.

I'm thinking Groupon will work for businesses with high fixed costs and no variable costs (Chelsea Piers), businesses with insane margins (spas), and places that think they can replace a regular part of someone's life and get a returning customer (centrally located bagel shops, pizza shops, etc). Right now a lot of high variable cost unique experience type businesses are trying Groupon, and that seems suicidal to me, but eventually people will figure out what Groupon works for and what it doesn't.

Re: 40% of Groupon merchants say "never again"

#82

Post by djb_hackernews »

jonursenbach wrote: post #63
minouye wrote: post #55

Earlier quoted context omitted.

Some anecdotal evidence, about Groupon's inability to make these deals "work" for merchants: This Saturday I went skydiving, and used a Groupon I purchased last month. The skydiving school had nothing but bad things to say about Groupon. According to the school, they were told that they would sell somewhere in the neighborhood of 200-300 skydives--they ending up selling closer to 1200. Now the fact that the number of…

I thought that Groupon doesn't cap their sales?

They do, but they'll pass on sales if thats a requirement. They have a waiting list of customers. Imagine that.

Another anecdote, my friends 1 year old small business approached Groupon to do a deal, they turned him away and told him to come back when he has more press.

Re: 40% of Groupon merchants say "never again"

#83

Post by slowpoison »

jonursenbach wrote: post #63
minouye wrote: post #55

Earlier quoted context omitted.

Some anecdotal evidence, about Groupon's inability to make these deals "work" for merchants: This Saturday I went skydiving, and used a Groupon I purchased last month. The skydiving school had nothing but bad things to say about Groupon. According to the school, they were told that they would sell somewhere in the neighborhood of 200-300 skydives--they ending up selling closer to 1200. Now the fact that the number of…

I thought that Groupon doesn't cap their sales?

I have seen Groupon deals with caps. Will append to this post once I locate it.

Re: 40% of Groupon merchants say "never again"

#84

Post by anonymous245 »

edw519 wrote: post #74
anonymous245 wrote: post #69

Earlier quoted context omitted.

Interesting. But I don't necessarily agree that all merchants are pissed off. One merchant I bought from had a direct store and an Amazon store. The Amazon store price was higher (by about $1.50 on a $20-ish item), but I still ordered from Amazon because I expected the merchant to take care of Amazon customers better wrt shipping time etc. :) As a buyer, given a choice I would rather order from the Amazon store than…

I think your e-commerce customers just need to raise their Amazon store prices. Those who sell commodities don't have that option. Every time any of them has tried, sales went into the toilet. You have to stay competitive when Amazon's web page shows your item right next to your competitor's.

Thanks, that's a good point.

Re: 40% of Groupon merchants say "never again"

#85

Post by lsc »

jrockway wrote: post #73
edw519 wrote: post #72

Earlier quoted context omitted.

So maybe 15% isn't much when you consider how difficult it is to build your own e-store? 15% isn't much when you consider how difficult it is to acquire a customer. Everyone I've loaded onto Amazon already has their own e-store. But here's what happens...Sales increases 10 to 20% almost instantly. But profits don't because of the 15% commission. If you have a premium product with a large margin and no e-store, Amazon…

Interesting. Everyone I've bought from on the Amazon Marketplace has totally failed to "recruit" me as a customer. I typically get a box with what I ordered in it, and maybe an invoice. Nothing asking me to visit their website or anything like that, ever.

This is my experience as well. the amazon site seems to make it look like I'm buying through amazon, though it's actually sold by 'some company in the small print'

I agree with the OP that 15% is pretty high for selling commodity stuff, but amazon seems, ah, sub optimal for lead generation because they make it look very similar to just buying from amazon. Like you, I've never gone from buying through amazon to buying direct from a merchant.

I think in some cases, the 15% might work out. As far as I can tell, when you buy in small lots you can often get a better deal than larger, more "reliable" lots, just 'cause someone further up the chain from you took a loss, (like someone bought a bunch, then went out of business and liquidated the lot at below-cost prices.) or because corruption is such a large problem (the larger the corporation, the more kickbacks are expected, as far as I can tell. If I own the company, kickbacks aren't going to get me to choose an overall more expensive vendor, it's my money, either way.)

either way, from what I've seen, often smaller lots from smaller resellers can be had cheaper than larger lots from more reputable resellers, even after you amortise out fraud/misrepresentation losses, so it's possible that the guy who sold me the cheap ESD wristbands on amazon really has more margin on the product than amazon direct would have.

Re: 40% of Groupon merchants say "never again"

#86

Post by lkjuhygthyujk »

edw519 wrote: post #25

For a merchant to make effective use of Groupon, he must use it for one purpose: to acquire customers. Once someone comes to you via a third party, you must convert them into your own customer. This generally requires getting their personal info so that you can engage them directly in the future. Amazon merchants have been doing this for years. Pay Amazon their commission for the first sale, then move the name to the…

You don't need mailing lists - it works for bricks and mortar stores.

I bought a groupon 1/2 price coupon for a fancy clothes store (Gap). I wouldn't normally go in there but for $10 they got me to go in and buy $50 worth of shirts. I will probably even go back.

Or they could have hired some 17 year old super model I have never heard of, for $Ms to promote them in a magazine I never read - but that wouldn't have got me in the door.

Re: 40% of Groupon merchants say "never again"

#87

Post by prawn »

minouye wrote: post #55
jonpaul wrote: post #43

Earlier quoted context omitted.

Groupon may be the one to bring them customers, and you're right, it's the merchant's responsibility to convert the incoming people to customers. However, Groupon should find a way to help with this. Because if they don't, merchants will continue to blame Groupon for the failures. If this continues to happen, Groupon will fail.

Some anecdotal evidence, about Groupon's inability to make these deals "work" for merchants: This Saturday I went skydiving, and used a Groupon I purchased last month. The skydiving school had nothing but bad things to say about Groupon. According to the school, they were told that they would sell somewhere in the neighborhood of 200-300 skydives--they ending up selling closer to 1200. Now the fact that the number of…

Wouldn't surprise me, knowing quite a few small businesses, if they were told about the option to cap their sales, but ignored it ("How could more business ever be bad?").

Groupon have info online for merchants, advising them on how to deal with what they'll experience, but again it wouldn't surprise me if most merchants completely ignore it. People won't read instructions or advice unless you hold their eyelids open and force them to take it in. And small business owners (I'm one of them) are usually busier and more stressed than others, meaning we're even less likely to make use of such guides.

Regardless it sounds like a great challenge for Groupon to have. I'd rather have a near-endless stream of customers in this situation, than be at the beginning of it all trying to attract anyone to the site at all.

Re: 40% of Groupon merchants say "never again"

#88

Post by trustfundbaby »

The 32% that said they didn’t make a profit from the program reported that customers rarely bought more than the coupon deal and few returned to the business at a later date.

----------------------------------------------------

Does that remind anyone else of digg traffic?

Re: 40% of Groupon merchants say "never again"

#89

Post by garply »

pg wrote: post #71
edw519 wrote: post #60

Earlier quoted context omitted.

Do local retailers really need customer info? They do if they want to get them away from Groupon. I have e-commerce customers who love Amazon Merchant because it's cheaper to acquire customers than SEO or buying mailing lists. But nothing pisses them off more than a customer who comes through Amazon a second time, costing them all their profit. They need to save the customer info in order to make the second sale a di…

I don't believe that would be true except for local businesses that are selling a commodity. Those who hope to convert me into a repeat customer based on the quality of their donuts or haircuts will do it after one visit.

Even for non-commodities, customer contact information can be invaluable. Often would-be repeat customers just forget you exist, but if reminded about you they would happily continue to buy.

The same reasoning for websites periodically sending their users emails is at work here. Remember how Facebook used to send email notifications that you've received a new Facebook message, but wouldn't tell you the content of that message in the email? "Hey, we have more goodies back here - come visit again."

Re: 40% of Groupon merchants say "never again"

#90

Post by qq66 »

joe_the_user wrote: post #57
minouye wrote: post #55

Earlier quoted context omitted.

Some anecdotal evidence, about Groupon's inability to make these deals "work" for merchants: This Saturday I went skydiving, and used a Groupon I purchased last month. The skydiving school had nothing but bad things to say about Groupon. According to the school, they were told that they would sell somewhere in the neighborhood of 200-300 skydives--they ending up selling closer to 1200. Now the fact that the number of…

That doesn't really answer the point above. Did the merchant have a program in place to turn the one-time customers into continuing customers? If they did, more customers would have cost them more in the short run but helped them more in the long run. If they didn't, one would assume it was a failure regardless of the numbers. And did school waste the time they could have spent talking themselves up with talking Grou…

The merchant also needs to know, "Am I in the business where an impulse buyer can be converted into a repeat customer?" I don't know what the user behavior is like for skydiving, but I can easily see it being the kind of thing people only want to try once. If you're in a business where impulse buyers don't convert into long-term customers, you need to find alternate channels for customer acquisition.
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