Tag Archives: Groupon

What People are Saying about Groupon

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A list of links of interest to people who want to learn more about how Groupon is screwing small businesses and customers.

A while back, I wrote a few posts about Groupon — including “Why Groupon is Bad for Business…and Consumers” — that continue to be among the most popular posts on this site. But if you really want to learn more about the dark side of Groupon, I urge you to check out some of the links I’ve collected over the past year or so:

  • Groupon gripes: Are daily deals headed for disaster? – Like I’ve been saying, SOMEONE has to pick up the tab on these great deals, and it’s usually the business owner, sometimes disastrously.
  • Why Groupon is bad for your business (and mine) – “Groupon, the so-called social buying site (even though there is very little social going on outside of the manipulation of basic human behaviors like their reaction to a situation where there is sense of scarcity) and the fastest growing company in history, is bad for your business.” Read why on EmergenceMarketing.com.
  • Groupon Reviews: Worst Marketing For Your Local Business – “Just because millions of merchants have 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.” Read a real case study on RetailDoc.com.
  • Groupon’s big discounts: how its coupon business could eventually cripple the merchants that rely on it – The author of this piece almost gets it. “The logic is simple: Merchants are encouraged to use the deals to attract new customers, who in theory will return at full price. But, in what seems to be an increasing number of cases, customers come for the deals and then leave for deals offered by other merchants through Groupon. So the number of “new” customers attracted by cheap prices increases, and the number of loyal customers decreases as shoppers prefer to become “new” again for whomever offers the best deal.” Read more on Slate.
  • 2 of 2 Daily deal sites: retailers tell their side of the story – Another objective look at Groupon, this time from the retail side.
  • Groupon Was “The Single Worst Decision I Have Ever Made As A Business Owner” – More on Groupon.
  • Why I Want Google Offers And The Entire Daily Deals Business to Die – Thank you, TechCrunch, for bring more attention to this problem.
  • Why Groupon Is Poised For Collapse – “Businesses are being sold incredibly expensive advertising campaigns that are disguised as “no risk” ways to acquire new customers. In reality, there’s a lot of risk. With a newspaper ad, the maximum you can lose is the amount you paid for the ad. With Groupon, your potential losses can increase with every Groupon customer who walks through the door and put the existence of your business at risk.” I couldn’t have said it any better. On TechCrunch.
  • Why Groupon is Bad for Small Business – Some specific notes on what’s wrong with Groupon from the small business owner’s point of view. Excellent points.
  • Groupon Is a Straight-Up Ponzi Scheme – Why Groupon can’t work in the long run: “The vast majority of local merchants can’t discount more than 10 percent. Some can go maybe 25 percent in special situations. But 75 percent is a wholly unsustainable number. If all local merchants begin using Groupon then it can’t send loyal customers to anyone; Groupon can only send discount chasers to merchants. Which means that as Groupon grows, both local merchants and their competitors will find that Groupon’s main argument no longer works (if it ever did) — Groupon simply can’t send them loyal new business. So they all stop using Groupon in its current form.” Read the rest of this interesting article on Knewton.com.
  • Groupon amends IPO filing to remove odd accounting – Read about it in Business Week.
  • Groupon’s loss jumps in second quarter – “Groupon Inc.’s second-quarter loss more than doubled as it hired more than 1,000 new employees, even though the Internet daily deals company trimmed back its marketing costs.” Read more in Crain’s.
  • Groupon IPO: Could the company really be worth $30 billion? – While investors may be stupid, analysts usually aren’t. Did anyone really fall for Groupon’s creative accounting? Read about it in Slate.
  • Are online coupons worth it? – Another aspect of Groupon: online reviews of your business. Interesting experience and food for thought.
  • The economics of Groupon: The dismal scoop on Groupon – The Economist provides some real-life numbers on Groupon, showing that original estimates of their IPO value were extremely optimistic. Marketing expenses are currently eating up more than 60% of their revenues. I can’t see how that could possibly be sustainable, especially when they’re losing merchants and customers every day.
  • Groupon demand almost finishes cupcake-maker – Simple math: sell enough product at a loss and you will find yourself in deep financial do-do. Don’t let Groupon fool you into offering a deal like this.
  • Groupon Snafu Leads Baker to Produce 102,000 Cupcakes – Another Groupon horror story indeed.
  • Groupon to be investigated by Office of Fair Trading – “Advertising watchdog refers daily deals website after it was found to have broken UK ad regulations 48 times in 11 months.” And so it begins in the UK.
  • more to come…

I’ll update this regularly as I find more links.

Got a link to another Groupon-related piece you’d like to share? Put it in the comments.

Two Ways to Hasten the Demise of Groupon and Its Clones

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Enough is enough already.

I hate Groupon. That should be clear by now. I think that any business that can bring in more revenue than the businesses that it “serves” is a leech and not a “marketing partner.” While they’re telling merchants how they’re getting “risk free advertising,” they’re selling to cheapskate customers, most of whom will only buy at the 50% (or more) discount Groupon requires. Good luck selling again to those folks at retail.

So it pisses me off to no end when I get a call from yet another Groupon clone. This one, based in Scottsdale (supposedly; it’s more likely a franchise set up by someone suckering work-at-home dreamers) claimed to be different. I let the sales rep stumble through an explanation of how they were different before asking her (1) how many helicopter tours a person might want and (2) whether their friends would buy at retail if I’d established a history of offering 50% discounts through companies like hers. Then I told her I wasn’t interested and not to call me back. And I added her number to my growing list of telemarketer numbers on my cell phone so if she does call back from that number, my phone will ring silently and I’ll know not to answer if I happen to notice it ringing.

And after hanging up, I thought of two ways we can all work together to make Groupon and its clones go away. Be advised that I’m in a foul mood so my language is a bit NSFW in this piece.

  • Just Say “Fuck Groupon” This is the method I use. I refuse to be a Groupon (or clone) merchant and I refuse to buy Groupon (or clone) vouchers. I’m not giving them any business in any way, shape, or form. I’m also making the sales rep go through a bunch of their bullshit sales pitch when they call just to waste their time and increase the marketing costs before explaining, in no uncertain terms, what I think of their business model and “service.” (I can be a real bitch.) I’m also spreading the word about how bad they are for business and consumers by sharing links to fact-based reports from actual Groupon merchants, customers, and business analysts. (Seriously: there’s enough info out there to make one wonder how Groupon has managed to survive this long. Are there really that many suckers out there?)
  • Just Say “Fuck the Groupon Merchants” This is the method people who aren’t small business owners can easily use. Just buy as many Groupon (or clone) deals as you possibly can and then use them all up as quickly as possible — keeping in mind that a good percentage of Groupon merchants are already on the verge of bankruptcy and may not be in business if you wait. Be sure to come at the businesses’ most crowded times and complain loudly when you don’t get the service you might get if there wasn’t a half-off deal filling the place with other cheapskates just like you. Whenever possible, break the rules and use multiple vouchers to increase your discount potential. Then, if the buying experience isn’t perfect, go on Yelp or some other online rating service and give the business just one star with a review that exaggerates how crappy it is.

Now, in my opinion, small businesses already have enough grief that they really don’t deserve to be fucked over by Groupon (or clones) and cheapskate customers. So I’m really hoping you go with the first method.

Enough said.

THIS is What I Mean about Coupon Deals Hurting Small Business

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Customers think we’re so desperate for business that they won’t buy without a discount.

Prepare for a rant.

For the past two days, I’ve been fielding phone calls from the concierge at one of Phoenix’s big resorts — you know, the kind where people dump hundreds of dollars a night to be pampered at a secluded desert paradise in the middle of the country’s sixth largest city. A guest coming in November wants to take a helicopter tour. We must have gone back and forth about a half dozen times with pricing and tour questions. Apparently, a visit to Flying M Air’s Web site, which has complete information and pricing, was beyond the capabilities of the concierge in question.

On the second to last call, it was determined that the guest wanted a flight in the vicinity of the Salt River and Apache Trail. It’s a good match for Flying M Air’s Salt River Lakes & Canyons Tour, which is about 60-70 minute long and costs $695 for up to three passengers (not each) from Scottsdale Airport. I provided this information and the concierge said she’d get back to me.

She just called again. The client says that there aren’t three people on the flight. There are just two. And they’re willing to spend $495 for the same tour — as if it’s $200 cheaper for me to fly two passengers instead of three.

In other words, they’re trying to haggle my price down.

I told the concierge that would not be possible. She was very understanding and said she already told him that. But I doubt it. I suspect she was trying to help him haggle. (I also suspect that she’d still expect her 10% referral fee on the flight, thus digging even deeper into my pockets.) She apologized and we hung up.

I’ve said it before and I’ll say it again: I am not so desperate for business that I’d be willing to operate my aircraft near or below cost just to take a cheapskate and his wife flying.

But what makes these people think they can get away with bullshit like this?

I suspect that the deep discount mentality fostered by operations like Groupon and its clones has something to do with this. It’s the whole “only idiots pay retail” mindset. It’s the idea that companies have inflated their prices so they can offer discounts.

News flash: All of my clients pay retail. That’s the only pricing I have. Take it or leave it.

And my prices are already among the lowest in the area. My Scottsdale-based competitor would charge more than $1,500 for the same flight. Would Mr. Cheapskate be offering that company $495 for their tour? That company wouldn’t even turn a blade for less than $1,000.

My policy is firm: no discounts, no haggling. My services are priced fairly and I will stand by them.

Besides, I have way better things to do with my time than deal with the kind of client who doesn’t understand the value of what he’s getting for his money.