Comments on: Why Groupon Will Fail

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By: World Spinner

World Spinner — Sat, 20 Nov 2010 03:37:57 +0000

Why Groupon Will Fail…

Here at World Spinner we are debating the same thing……

By: Mark

Mark — Fri, 19 Nov 2010 23:47:24 +0000

* and in turn not a good way to stimulate our economy

By: Mark

Mark — Fri, 19 Nov 2010 23:46:21 +0000

Good article Spiro…..This is not a good way to support your local business and in trun a good way to stimulate our economy. I am glad to see something like this happening……….

http://smallbusinesssaturday.com/

By: admin

admin — Fri, 19 Nov 2010 23:05:34 +0000

Paul, thanks for reading and taking time to comment, though I disagree that most would “agree” the promotion was profitable. I believe most would “say” it was to cover their butt with their bosses or save face when questioned. But it is nearly impossible to make money at a 75% discount off the price you can expect a regular customer to pay. I ran though countless amounts and scenarios with my clients to try and find one I could say might be beneficial and found none. The return on investment is horrible, instead of running a $25 for $50 groupon, why not just mail a $25 gift certificate to everyone in your town? it will cost you $12.50 less at the least, and the PR benefits are a huge upside, plus you can control the flow out and thus back in. When I started researching the real feedback, I found many situations where honest people said they regretted the decision, and very few that could tell me they were doing it again. Groupon is currently making absurd money (50 million/week), and they are still trying to get a huge buyer (Google, Yahoo, Ebay, Amazon) to take them over. The smart speculation is because they know the repeat enrollment is not there in sustainable numbers, and the investors want to get out while they can get huge money back. We will see if they find the buyer they are seeking.

By: Paul

Paul — Fri, 19 Nov 2010 10:18:02 +0000

Although not acknowledged above, most merchants will agree that their Groupon promotion was profitable. The problem for them (as hinted above) is that their margins were worse than for walk-ins. And repeat business was terrible.

And that’s the bottom line with Groupon: unless it starts to deliver quality customers instead of bottom-feeding “pond scum” in the metaphorical sense, why should any new customer sign up?