How to Leave a Review for a Merchant on Groupon
[This is an extract from my ebook, Groupon: Why Deep Discounts are Bad for Business organisation] Just because millions of merchants accept fallen under the spell of Groupon, a PR juggernaut, and their like, it doesn't mean you should. It's a killer alright, a profit-killer. And while I'll requite you my opinions afterwards, here is an actual Groupon merchant story not glowing with anything simply red ink. Meet Kim, Owner of a parent teacher store. I met Kim at a briefing and she joined my Facebook Fan page awhile agone. Hither is her Groupon story: The Groundwork Then, in 2010 I was in transition, making changes to cut out all the loss I had in 2009. An employee came to me and said we should talk to Groupon. I liked using it as a client but I put it off for months. Finally I decided to make the call. It seemed like a good bargain, I had to do virtually nothing and they would send me a check, plus I would become my proper name out to tons of people. I agreed to do information technology. My offering? $forty worth of merch for $twenty. We thought possibly, if we were lucky, we'd sell 150. Ane thing I didn't call up most was timing- July and August are my busiest times of year. Plus information technology is the fourth dimension of twelvemonth I need the almost greenbacks catamenia since all the bills are due Sept one. Our Groupon hit on July 21st. I woke upwardly at 7am and the deal had already tipped at over fifty, making it agile. 20 minutes afterwards there were over 100 sold. I started to panic... Help! By the fourth dimension I talked to Groupon nearly 400 were sold under the incorrect terms and they said I HAD to award them. Luckily they agreed to alter the fine print, but nevertheless fabricated it that you could buy 2 as gifts. At this time I asked them to cut it off at 500 and they wouldn't. By the end of the promotion we sold 1158, the most "successful" retail Groupon in the retail marketplace of my city; the start contained retail store to sell over g. Yay me :( That'southward $46,320 of merch at retail or roughly $23,160 at cost...of that I get around $10,000 because of course I only get 50% of the deal minus credit menu fees (ugh!) Groupon gets their fifty%. Groupon told u.s. to strictly enforce the 1 per household rule, unless they were 1 of the kickoff 400 to buy. A lot of people have been very kind and gracious. Nosotros are very grateful for our electric current and new customers that purchased more than than $40 and will shop with us in the future. Redemption Groupon said they will refund anyone who bought multiples and tries to employ more than one, but I think they just hand information technology to a friend and have them buy the merch anyway. Many just spend $40 to the penny and nosotros tin can tell they volition never exist back. I ran my numbers for July and Baronial so far and was happy to see we were upwards, until I saw it was the exact corporeality spent on Groupons redeemed so far. There'southward more... And even more bad news... The Retail Doctor'south Take & The Existent Costs But that's usually what y'all discover like this quote in the NYT article from April 13,2011 Wise For Some Restaurants, Coupons Are a Bleed at Others, "Our life changed after Groupon — nosotros would do it again," said Michele Casadei Massari, 35, an owner of 2 Piccolo Cafes in Manhattan. Groupon sells its online coupons for half their food value and and so Groupon takes an additional 50 percent of the discount sales. On March ane, in a timed deal, Piccolo Cafe sold 1,142 coupons for $xiv worth of food in 24 hours."You don't make money on the deal," Mr. Massari acknowledged, "but in the finish nosotros are even." Reality Bank check In Mr. Massari'due south example Groupon collected $7994 for what normally would take been $15,998. That means later clearing the cc fees, he gets near $3677. If food costs are the standard 30% in a restaurant that would make it $4799 or a real loss of well-nigh a dollar a customer - that'south just in food costs. Far from being even. Kim will souvenir her customers $46,320 worth of trade. She has to come up with $xi,530 to pay the bill on the commencement grade merchandise that is leaving her store. For her to make that dorsum, she would have to sell most $400,000. As a business organisation model for Groupon, information technology is a bang-up way to get 50% of the revenue off a website while providing none of the fulfillment. For her shop'due south employees, it is jump to make them uncomfortable when they find "1 of those people." Especially if they are at present battle-scarred from the kickoff 400 customers. (Retrieve less than 1/2 of those issued take been redeemed). Is that how you desire your employees to feel? I don't recollect and so. I doubt Kim gave it whatsoever idea in the starting time either. I doubt anyone else considers that while reading about the "crush of customers" businesses receive. This promotion too stole sales from regular customers who would take bought more afterward in the twelvemonth impacting her bottom line during the crucial bill-paying calendar month of September. And can you arraign them? $twenty for $40 worth of merchandise? Why not buy v and plan your holiday shopping? Equally nosotros've seen Groupons tin be bang-up if you are the buyer only terrible if you are the business. Yeah Buts Those of yous maxim, "What well-nigh all that great exposure to those millions of people? Isn't that worth something?" Those of you saying, "Yeah but if she'd created the offer ameliorate information technology wouldn't have been so bad." I'll requite you it could take been tightened upward merely the main point is who you are attracting are not lifetime premium customers but discount lifestyle customers. Those people could simply as hands been attracted by a l% off sale without having given an additional l% of Kim's needed coin to Groupon. Those of you maxim, "How near all those raves from other businesses?" Look deeper, it is rare for anyone to mention difficult numbers of the costs of the promos. GAP is freely mining the disbelieve bin. GAP made headlines earlier this week also when it announced a 25% discount for Foursquare users who checked in at one of its retail locations in the U.S. or Canada. I'm sure they will motion a lot of product just are they cannibalizing their target market place, acquiring unprofitable customers and preparation them to expect for the bargain? I think so. [Update April 13, 2011] - Wall Street Strategist Brian Sozzi downgraded GAP from Buy To SELL in part considering, "We call up Gap overall has ramped up its promotional cadence in recent months to movement merchandise and if this is sustained, places risk to consensus EPS estimates." Is that who yous want to model your business afterward? Final thought You lot've been warned... This is an xi-role series on Groupons and their ilk, discounting and couponing in general and why they are all and so damaging to your business organization. That'southward whether you are a large brand like GAP or a regional concatenation or local contained retailer. Here are the balance of the posts in case you missed them: [Update xi-iv-xi Checkout my new mail The Groupon IPO - Bad News For Main Street? ] Bob Phibbs, the Retail Physician®, has helped hundreds of businesses in every major industry, including hospitality, manufacturing, service, eating house and retail. He is a nationally recognized expert on retail sales training, customer service, sales, and marketing. With over thirty years experience beginning in the trenches of retail and extending to senior management positions, he has been a corporate officer, franchisor and entrepreneur.
"First off, permit me say that 2009 was a bad twelvemonth for me. Information technology was my first full year in business organization later buying the store in 2008 from an possessor who had it for 28 years and was letting the shop get out of business organisation.
I tried to call Groupon in Chicago and of grade they weren't open yet. People were buying v, one for them, and so ane for each of their 4 kids. The fine print was ALL WRONG. It should have been 1 per person, per household and that they could buy one for a souvenir.
Plus all the people I saw first on the listing that were ownership were electric current customers!
Redemption is a nightmare! We have a huge binder filled with over 1000 names and so many people bought multiples. They get and so nasty when y'all ask for ID and when we tried to enforce the one per household/person rule they fabricated a scene...so we concluded up taking it anyhow.
Groupon doesn't send you the coin after the promotion; they ship information technology to you in iii installments over the life of your Groupon.
They don't expire until January...nearly 700 more are all the same out at that place! Yikes!!"
We are then fortunate that Kim would permit us to share her cautionary tale to all of you lot ready to join the Groupon bandwagon. I mean with all the press this site has gotten, information technology would exist easy to look past the existent costs of these promotions.
As I cover in my book, The Retail Physician's Guide to Growing Your Business (Wiley), the average American business makes about three cents on the dollar in profit. Yep, that is a really adept business in average times.
Groupon will receive about $11,530
Kim will receive net effectually $10,000
Those of you lot maxim, "What about the incremental sales?" She has reported ZIP. Coupons clippers are notoriously thrifty. They chase the "deal of the 24-hour interval" not you.
Those of yous touting that fifty-fifty the GAP recently used Groupon should bear this from venerable blogger Mashable, "... with sales of around 300,000 Groupons, Gap lost $7.5 million in revenue on the pay $25-go-$l coupon deal." Since then they updated the mail to 441,000 Groupons sold for more than than $eleven 1000000.
Just because you see lemmings, doesn't mean its a good idea to follow them off the cliff.
Source: https://www.retaildoc.com/blog/groupon-worst-marketing-business
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