Groupon - The company killer?

neil_g

neil_g

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Neil
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The other half is a sucker for a good Groupon deal, but just recently we're finding that after purchasing the deal and going to redeem a few weeks later a lot of companys have gone bust.

It may just be a coinsidence that in the current tricky climate they went bust but I can't help thinking that Groupons high commision and the rediculous deals they force upon companies often leading to making them a massive loss are running them into the ground.

Discuss..
 
FWIW I think anyone going down the Groupon route has already either got business problems or a very bad business plan.
 
IMO, they don't "force" anything on business owners, but do try and sell them more than they really should take on - business owners should know when to say no if it's going to damage their business.

Groupon CAN, and does work for lots of companies, but the deal has to be thought through before hand, and not rushed into without both eyes open.
 
mattyh said:
IMO, they don't "force" anything on business owners, but do try and sell them more than they really should take on - business owners should know when to say no if it's going to damage their business.

Groupon CAN, and does work for lots of companies, but the deal has to be thought through before hand, and not rushed into without both eyes open.
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yes ive heard from a few people that have used groupon that they try and push for greater and greater discounts.

i think youre right that it does have to be thought out well, especially in regard to demand. the other half ordered something in november through a deal and it finally turned up this week.
 
Watched something on TV - could have been watchdog - and they were looking at sites like Groupon as being something of a mixed blessing for participating companies.

On one hand the companies get additional income and recognition but on the other, the discounts can encourage ridiculous order numbers that end up costing the company more than if they'd stuck with their original plan.

One example was a cake firm was an online cake maker who were advised by Groupon that they'd get x amount of orders (say 200 for example) at whatever discount they were offering. In fact, they got about 1500 orders so had to take on additional staff that ended up actually eating up the profit because the orders were heavily discounted from RP anyway.

The misses used it for a girls night out at a local health spa hotel before Christmas. They got a glass of champagne, a 3-course meal and a room in the hotel for about £40 each, providing eight people booked. The regular room rate was something like £80 anyway, and the food must have been £35. Can't see where the profit was made.....

I suppose it's knowing your business, what you can and can't afford to do, and knowing how an offer could improve business. The participating retailers have to take some responsibility for what happens if they have a bumper reception to an offer.
 
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If you do a promotion through groupon and don't limit the number you're a berk. You also need to make sure that any offer actually covers your costs at a minimum. Failing to do either shows you have no business sense.
 
I've never yet found a Groupon offer that is even the slightest bit of interest to me.
 
mattyh said:
tens of thousands have though, so they're doing something right
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I have seen and used many an offer, been good value to me in the past.

Me and about 8 friends all took advantage of a golf club deal last spring / summer. £15 for a round including lunch and a beer. Was billed as being worth £48 which made it seem amazing value..... And it was. Some of my friends bought 3 vouchers at that price.

The club was more than happy to flog them but booking your round was a different matter. Due to the success of the deal, the club was full all day every day for weeks on end and they didnt seem too worried that our vouchers were fast approaching expiry. We asked if we could extend them, afterall, it was the club that was busy due to the high demand, but it was declined.

When we did get on the club said they will never use groupon again. I was told that the commission was so high that it didn't warrant all the extra work it created for them.........

Soon after, the vouchers were being sold again. I guess it wasnt quite THAT bad for them. (especially as the vouchers have an expiry date and if they weren't used then the club made money on wasted vouchers).
 
ben202020 said:
Soon after, the vouchers were being sold again. I guess it wasnt quite THAT bad for them. (especially as the vouchers have an expiry date and if they weren't used then the club made money on wasted vouchers).
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either that or their marketing dept (like many others) ignored the minute amount of profit or actually a loss they made and just wanted to generate "interest" in the company.

(i hate marketing depts :LOL:)
 
mattyh said:
The cost of the round of golf was probably just covering costs, but I'm sure a lot of people will have had a drink or some food after their round, which is then profit :)
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we booked some osteopath treatment through groupon, which was 2 introductory sessions for £10. the osteo openly admited they made no money out of the offer unless the client then had additional treatments.
 
I recently went on a beginners photography course that was charged at 30 pounds and he said that groupon take a 50 percent cut. But he usually sold the courses for 90 pounds per person which is a little over priced in my opinion. But thinking about the time we were there and he had 15 people with him, even with groupon taking their cut, he is still making an alight sum for a day of talking about cameras.
 
A lot of businesses do rely on the upsell from Groupon's, and that is where the money can be made...

I did a write up of Groupon for photographers after seeing a fairly crazy offer on there a while ago and I really couldn't get the offer to make any sort of money, let alone provide a wage/living for the photographer in question
 
I think that typically the people who book/buy via Groupon are unlikely to become regular customers at normal prices, which means that the marketing aspect is unlikely to work.

The income actually derived from the Groupon deal is unlikely to be worth much after 50% commission AND very slow settlement, which means that it only works if there is an upsell that's outside the Goupon deal, and if enough people take it up.
 
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