40% of Groupon merchants say "never again" • Hacker News Board

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

#61

Post by TheSOB88 » Tue, Oct 05, 2010, 5:46 PM UTC

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 problem is that we're not dealing with completely rational, all-knowing merchants here. We're dealing with real life, and people have other things on their minds, like the pressures of running a business.

If Groupon can't explain itself and how it differs from established marketing, the kind the merchants are used to, then it will fail. It has to provide value to real merchants. That certainly includes educating them about what is going on with their service, especially concerning the risks.

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

#62

Post by singer » Tue, Oct 05, 2010, 5:46 PM UTC

steveklabnik wrote: post #37

singer wrote: post #34

Earlier quoted context omitted.

"Not stop because they found somewhere they like" I bet the average person would go back and/or recommend the restaurant to friends if they had a good experience though.

This article would seem to indicate that that's not really the case.

According to the article, less than 32% of the customers visited once.

"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."

If over 68% of the customers returned, then I'd call that a huge success.

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

#63

Post by jonursenbach » Tue, Oct 05, 2010, 5:47 PM UTC

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…

I thought that Groupon doesn't cap their sales?

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

#64

Post by jobu » Tue, Oct 05, 2010, 5:48 PM UTC

kno wrote: post #46

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…

One issue Groupon have is to review their cut to the lower, recurring complaint is the fact that they charge almost at least 50% of the sale, for most small businesses the discount + Groupon cut is just unsustainable.

They also need to stop the hard sell tactics reported by some small business owners. It's unacceptable to lie and say they aren't able to limit the number of groupons sold, or not explain up-front that the minimum split groupon will take is $10. It really seems like they prey upon the less savvy business owners, and it will cost them in permanent reputation damage.

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

#65

Post by jrockway » Tue, Oct 05, 2010, 5:49 PM UTC

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…

Does Amazon really take 15%? I hate dealing with store sites directly when I can just go to Amazon, search a bunch of stores at once, and buy what I want with one click. I have a vague idea of who I do business with, but I would never think to search for them directly.

So maybe 15% isn't much when you consider how difficult it is to build your own e-store?

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

#66

Post by systemtrigger » Tue, Oct 05, 2010, 5:50 PM UTC

AlexMuir wrote: post #13

Alex3917 wrote: post #3

If 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.

It's not a scandal - I don't think this is a con. But I'd be interested to know how many businesses actually do repeat deals. It seems obvious that brands/chains (who probably do research and analysis) are not (yet) interested.

They're interested. I personally know a national brand manager who is creating a new product for the sole purpose of running it on Groupon. Margin problem solved.

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

#67

Post by johns » Tue, Oct 05, 2010, 5:54 PM UTC

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 say here that they do allow caps: http://groublogpon.com/cities/too-much-of-a-good-thing/

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

#68

Post by ig1 » Tue, Oct 05, 2010, 5:59 PM UTC

steveklabnik wrote: post #37

singer wrote: post #34

Earlier quoted context omitted.

"Not stop because they found somewhere they like" I bet the average person would go back and/or recommend the restaurant to friends if they had a good experience though.

This article would seem to indicate that that's not really the case.

As someone else noted the sample is very small, likely to only cover a dozen restaurants, so were talking about 6-7 places that wouldn't use it again. Also if you look at the comments made by the restaurants a lot were complaining about fraud (people photocopying groupons) and low tipping rather than lack of repeat customers (although there are a few along those lines as well).

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

#69

Post by anonymous245 » Tue, Oct 05, 2010, 6:00 PM UTC

edw519 wrote: post #60

pg wrote: post #56

Earlier quoted context omitted.

Do local retailers really need customer info? I thought the point of Groupon was more to supply the activation energy to transform people into regular customers: to get people in the door the first time to try a business's services or products, so they'd come back later of their own accord.

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…

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 directly from a no-name merchant.

I think your e-commerce customers just need to raise their Amazon store prices.

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

#70

Post by joe_the_user » Tue, Oct 05, 2010, 6:01 PM UTC

TheSOB88 wrote: post #61

joe_the_user wrote: post #57

Earlier quoted context omitted.

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 problem is that we're not dealing with completely rational, all-knowing merchants here. We're dealing with real life, and people have other things on their minds, like the pressures of running a business. If Groupon can't explain itself and how it differs from established marketing, the kind the merchants are used to, then it will fail. It has to provide value to real merchants. That certainly includes educating…

It all turns on whether Groupon sells at commodity level or at a service level.

If Groupon is selling group-discounts as commodity, then that it. It's your job to figure out how to use them. Google sells click-throughs and Home Depot sells cement. They might each be perfectly good but if you don't use them right, they won't do you any good.

If Groupon is like personal trainer and provides ongoing value, then does need to assure that its buyers achieve success.

Both business model-types can make money. Neither is going away. I don't know enough about Groupon to say which type they are.