Why Groupon Sucks for Merchants and LivingSocial Doesn't • Hacker News Board

Re: Why Groupon Sucks for Merchants and LivingSocial Doesn't

#41

Post by ecaradec » Fri, Apr 22, 2011, 8:46 PM UTC

It keeps surprising me that Groupon still find merchants given their current revenue share. Most deals are 50%, the share is 50% of 50% - 2.5% for credit card fee processing leaving the merchant with 22.5% of the original price.

If you sell anything that you buy, you'd need to have a 77.5% profit. Most restaurants only do a 10 to 20% benefit usually.

They'd be better served by pinning a huge promotion on their front like :'50% percent on friday'; they'd reach more customers in they neighbourhood, who would be more likely to come back and they'd keep a much better share of the deal.

It's not even nice for your actual customers who come the same day and pay the full price just to discover that they got screwed because they could have paid half by going to groupon.

Re: Why Groupon Sucks for Merchants and LivingSocial Doesn't

#42

Post by gergles » Sat, Apr 23, 2011, 6:37 AM UTC

patio11 wrote: post #29

Why on earth is the CEO of anything engaged in a long-running email discussion over two fraudulent coupon redemptions of $10 coupons? Mentally chalk it up to "cost of doing business" and move on. Shrinkage should not be a new experience to the owner of a fast food restaurant. (Neither should pathological customers, although I could see a Groupon getting you more of those than usual.)

Yeah, I was really turned off by the whiny "those Groupon customers sometimes come in and want to change their orders after they order!"

OK, so say "No, I already started making it" and done. Why he kept banging this point in that Groupon users were somehow trying to cheat him is beyond me.

Re: Why Groupon Sucks for Merchants and LivingSocial Doesn't

#43

Post by gergles » Sat, Apr 23, 2011, 6:40 AM UTC

ecaradec wrote: post #41

It keeps surprising me that Groupon still find merchants given their current revenue share. Most deals are 50%, the share is 50% of 50% - 2.5% for credit card fee processing leaving the merchant with 22.5% of the original price. If you sell anything that you buy, you'd need to have a 77.5% profit. Most restaurants only do a 10 to 20% benefit usually. They'd be better served by pinning a huge promotion on their front…

> It's not even nice for your actual customers who come the same day and pay the full price just to discover that they got screwed because they could have paid half by going to groupon.

Precisely. I went to a burger place in SF the other day and the line was 20 people deep, all paying with Groupons. The restaurant's price was already relatively high, so I felt annoyed at having missed out (even though I was planning on eating there anyway.)

I think it may be detrimental to run ridiculous coupon deals ever -- if you have ever given away (or basically given away) your product, then people that know about that recalibrate the 'real cost' of it to that. This is especially true, I'd wager, in places that 'seem like' they should have a high margin anyway (like tours, or spas, or other more service-oriented places.)