Hey guys,
Here's a mindblowing article I read about Groupon.
http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/
Essentially, Agrawal argues that Groupon operates as a loanshark, preying on other small businesses to stay afloat. They offer an enticing upfront cash payment (the principal) in exchange for large portions of the revenues (interest payments), while the company is forced to practically give away its goods (repayment).
Don't get me wrong, as a consumer I think Groupon is brilliant - who doesn't want 50 - 90% discount on meals, entertainment, goods, and services? And on the surface, it seems wonderful because it drives customers to spend more, yields clients to small businesses, etc etc etc. Unfortunately, all of that comes at the expense of the business.
Nevertheless, there have been some places that I have made repeat purchases thanks to an introduction from Groupon. Qoola, the frozen yogurt favourite in Vancouver, immediately comes to mind. I have gone back multiple times for their regular priced product simply because it tastes delicious, and is healthier than ice cream or gelato. Granted, it does take an outstanding business to benefit from Groupon. My argument would be that not every rundown shop can post a Groupon and expect an overnight turnaround. Customers aren't going to return if the food is bad, or the perceived price-value relationship is not enough. But for the companies that are suitable for this type of marketing, then Groupon can be a major boost to traffic.
I tend to ignore marketing stunts.
ReplyDeleteThis is interesting. Never knew how they do their business.
ReplyDeleteGood article, although I was kind of confused by the first paragraph.
ReplyDeletenever used ther coupons anyways
ReplyDeleteThat's an interesting view actually. I enjoyed this.
ReplyDeleteJessi, you are so smart! I heard the same thing, groupon is dead.
ReplyDeleteCoupons can be good if you do find yourself going back for the thing at full price because it was just that good, which is good for everyone really. Still, I'm getting sick of seeing Groupon adverts. It's always sad when a business goes under though :(
ReplyDeleteJust like any promotional technique really. The company has to decide whether the the benefits are worth the cost. You have to be confident that your product is going to bring it and establish loyalty in your customer base, otherwise it's an unnecessary expense. No point in promoting your wares if they're junk.
ReplyDeleteBusiness is 99% dishonesty 1% luck. *shrug*
ReplyDeleteWell it's really risk and reward. But if you have good food and great service, you can bet on returning customers
ReplyDeletei've been hearing that the collapse is imminent for months now though.
ReplyDeletenice post :P
ReplyDelete+follow
Interesting stuff, I just had a night at a posh hotel last night on Groupon.
ReplyDeleteI'm not a big fan of Groupon of Living Social... they bombard you with ads like crazy... it all seems a little sleazy to me for some reason. I have friends that regularly use them though, and love it, so maybe I'm just being paranoid?
ReplyDeleteI've never used Groupon, as it sounds like the title to a porno flick and seemed a touch, shady.
ReplyDeleteNot a fan of their system anyways.
ReplyDeleteYeah, I've never really used Groupon, even back when I WAS in Bellingham.
ReplyDeleteOn the other hand, it sounds like I might wanna give them a shot, if for no other reason than to see what kind of sale opportunities exist using such a system.
go to: cbc.ca/spark
ReplyDeletethey give you the honest lowdown... + tons more info on electronics, and more...
i see you're from the 'wet' side of that clan! :O lol
Now I want some frozen yogurt...
ReplyDeleteI knew there was something fishy about them from their commercials.
ReplyDeleteI didn't really understand what Groupon was until just now, but I'm not surprised they're a bunch of bloodsuckers.
ReplyDeleteI read few of your writes-ups.I thought it was great.So I thought I would add you as a friend so that we can read each others work. Hope you have a great day.New Emerging Technologies
ReplyDeleteLike someone already said, it just depends on the company. It's not like they HAVE to use Groupon. They just need to weigh the pros and cons of their situation.
ReplyDeleteI really didn't think groupons and such pages had a downside at all. O_o
ReplyDeleteFollowing and supporting, mate! :)
Follow that thread, TechCrunch had a ton of posts on the subject and several businesses say that it was worked out amazingly for their business. There are repeat customers 2 and 3 time groupon customers that say it is an amazing marketing tool. Milage may vary, ect.
ReplyDeleteKnowing the mechanics of it, that makes sense.
ReplyDeleteIt's ideal for a business to make an entry into the market, just like any advertising campaign it will be a major expense, but if the product is good then the customers will come back of their own accord
ReplyDeleteI find that foursquare works better than Groupon, and it's probably better for business.
ReplyDeleteFoursquare tracks nearby locations and you check-in and occasionally get deals. Repeat customers sometimes have even better offers.
I've always wanted to try frozen yogurt, never seen any though. More's the pity.
ReplyDeletei dont care much about what they use as long as it dosnt end up costing more to me the consumer.
ReplyDeleteI will have to checkout groupon.
ReplyDeleteI use groupon all the time!
ReplyDeleteI've never used even one groupon. I thought they were just for girls??
ReplyDeleteIsn't being on the merchant end of coupon always gambling?
ReplyDeleteinteresting post....
ReplyDeletehttp://silenceriver.blogspot.com/
always seem like a shady business to me
ReplyDeletevery interesting read
ReplyDeleteNice post ..... I never really read into it.
ReplyDeleteI haven't used Groupon before, although I've seen some good deals in there
ReplyDeleteRead this again, realized why I was so confused. Definitely needed to read the previous parts lol
ReplyDeleteeven though the article has some good points, i disagree that it's doomed to fail
ReplyDeleteI haven't tried groupon, now i definitely wont.
ReplyDeleteIt's bound to happen eventually.
ReplyDeleteIt does seem like a good idea, though. If a business ends up failing because of it it's really their own fault
ReplyDeleteGroupon started off so good and then just dissolved into junk and scams.
ReplyDeleteGroupon is not doing well in China.
ReplyDeleteThere should be money to be had in developing an internet coupon business- if they don't succeed, someone will.
ReplyDeleteGroupon, the tampon you can share with your friends!
ReplyDeleteI really never thought about Groupon like that before. You made some excellent points!
ReplyDeleteThanks for such informative blog about Group is poised for collapse. It really prove worthwhile in my How does groupon work business.
ReplyDelete