Is groupon worthit?
- Thread starter ftm42
- Start date
You have to make your calculations and make sure deal benefits offset its costs. If you are having cash flow problems I'd think twice before signing up to a loss making deal.
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Very difficult to generate repeat business off Groupon.
If you do your calculations and see that you can make a profit on running an offer then you may as well do it.
Not like you have to spend any ££ promoting it. Just remember they take 50% off the revenue you make so you gotta be shrewd with the offer you do.
If you can make a tiny profit or break even from the offer itself but have a good upsell that people are likely to take advantage of then I say try it.
If you do your calculations and see that you can make a profit on running an offer then you may as well do it.
Not like you have to spend any ££ promoting it. Just remember they take 50% off the revenue you make so you gotta be shrewd with the offer you do.
If you can make a tiny profit or break even from the offer itself but have a good upsell that people are likely to take advantage of then I say try it.
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graftonmedia
We have a client who runs offers on deal sites to keep his junior staff in a job, he's got the deal calculated right down to the penny. You really need to make sure you have the right offer if you do go down this route. Done properly.. and it could give you a boost. Do it wrong and it could cause you an even bigger headache. If you need any help/advice putting this together feel free to send us a message.
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Groupon is a good way of getting quick business, so would be good in your situation.
However, as stated it maybe very difficult to gain regular custom from it.
There is a localised equivilant just about to hit the market. and you keep 64% as opposed to 50% with groupon. Unfortunately it probably wont benefit at this moment in time, but if you weather the storm then keep in touch and I can pass you some advice once I know the target market has increased
However, as stated it maybe very difficult to gain regular custom from it.
There is a localised equivilant just about to hit the market. and you keep 64% as opposed to 50% with groupon. Unfortunately it probably wont benefit at this moment in time, but if you weather the storm then keep in touch and I can pass you some advice once I know the target market has increased
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Homer J Simpson
To be honest, I've bought a few 'offers' from Groupon, but never gone back.
Why? Well, because the main reason I bought it in the first place is that it was cheap, so wasn't going to be a repeat customer at full price.
However, I have just bought a full service for about £40 and if the garage is good, they may well get future business from me in terms of maintaining/MOT'ing my car.
But otherwise, I personally think Groupon is a bad idea.
Let's say you have a product which you usually sell for £100 (at it's RRP), you want to sell via Groupon and therefore you need to make a reduction in your price, so you now well it for say £60 (Groupon take £30, leaving you with £30).
How much did your product cost you in the first place, because whilst the customer is getting 40% off the RRP, you're actually discounting 70% in real terms as you only getting 30% of the RRP!
And then, you've got to try to sell again at full (or nearer to full price) in future, who says they'll ever buy again?
The one time I'd say it may work would be to shift old stock where you're not going to try to get them to buy the same thing at full price again in future, but you may be able to sell them your new/similar items or cross sell your other range of items.
Why? Well, because the main reason I bought it in the first place is that it was cheap, so wasn't going to be a repeat customer at full price.
However, I have just bought a full service for about £40 and if the garage is good, they may well get future business from me in terms of maintaining/MOT'ing my car.
But otherwise, I personally think Groupon is a bad idea.
Let's say you have a product which you usually sell for £100 (at it's RRP), you want to sell via Groupon and therefore you need to make a reduction in your price, so you now well it for say £60 (Groupon take £30, leaving you with £30).
How much did your product cost you in the first place, because whilst the customer is getting 40% off the RRP, you're actually discounting 70% in real terms as you only getting 30% of the RRP!
And then, you've got to try to sell again at full (or nearer to full price) in future, who says they'll ever buy again?
The one time I'd say it may work would be to shift old stock where you're not going to try to get them to buy the same thing at full price again in future, but you may be able to sell them your new/similar items or cross sell your other range of items.
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billybob99
Groupon is the biggest risk you can take, I'd rather play russian roulette.
Think about it. RRP is £100 you have to offer it for £50 and then you split that £50 straight down the middle with Groupon, you get £25.
If that makes financial sense to you then its worth it.
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You don't say what kind of business you are in. Is it a product or a service, is it something that requires recurring use (e.g. hairdressers) etc.. etc..
Some people have given some good advice on this thread but some of it may not be relevant to you. If you are a hairdresser and have staff on the payroll who are sitting around twiddling their thumbs, Groupon might work for you. If you are selling books online, Groupon will probably be a disastrous investment.
We are actually working on a website which puts the merchants in control of their offers. We will allow merchants to create their own offers as they wish so that businesses can give discounts as they see fit depending on their business model. aims and objectives. Going live in late summer/autumn so probably a bit late for you. PM me if you want details.
Best wishes and hang in there!
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Will they still be around in 6 months?
http://news.yahoo.com/groupon-fires-ceo-still-faces-underlying-problems-083011392--finance.html
http://news.yahoo.com/groupon-fires-ceo-still-faces-underlying-problems-083011392--finance.html
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arcon5
I run a deal on one of these daily deals websites in the past, I made a little bit of money, but my products had a 400-600% markup in them anyway. Even with this though I still had to jig my prices a little a they push for free delivery to be offered, wanted to run a 60% of deal and wanted 40% off the proceeds.
So a £30 product costing £6 to make, reduced to £12 of which I take £7.20 and have to pay postage.... So even that didn't work. In the end I changed the prices on a mirror website I was using which had low traffic anyway to achieve £12 for me, less postage is £8.70.
But factoring in the labour intensity of it all I would not do it again. I would consider it again on much better terms though.
How people make money with std products with a x2 markup is beyond me!!!! I suppose it could work well for the manufacturers themselves though if they need rid of stock fast and price isn't a factor.
So a £30 product costing £6 to make, reduced to £12 of which I take £7.20 and have to pay postage.... So even that didn't work. In the end I changed the prices on a mirror website I was using which had low traffic anyway to achieve £12 for me, less postage is £8.70.
But factoring in the labour intensity of it all I would not do it again. I would consider it again on much better terms though.
How people make money with std products with a x2 markup is beyond me!!!! I suppose it could work well for the manufacturers themselves though if they need rid of stock fast and price isn't a factor.
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Suzuki
Thats the problem - they don't. Groupon etc have sales people who tell people 'take a loss on this deal, you'll get loads of new customers' but people are starting to wise up that that is simply not true.
For most business owners, all you do is pay Groupon to create a load of hassle for you to deal with.
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- Original Poster
- #16
Thanks for all those replies. It has set in my mind that we can't do it.
For our business, one of our Directors suggested we sell something that we don't even sell at the moment, at a knock down price. I don't know yet how much it will cost us to produce them in the first place and tbh, it's a product I can get for a fiver at the local cheapie shop anyway.
Personally, I think the only way out right now is to wind up, at least for a year or two until this awful recession picks up.
For our business, one of our Directors suggested we sell something that we don't even sell at the moment, at a knock down price. I don't know yet how much it will cost us to produce them in the first place and tbh, it's a product I can get for a fiver at the local cheapie shop anyway.
Personally, I think the only way out right now is to wind up, at least for a year or two until this awful recession picks up.
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arcon5
Ye, probably not gonna make you any money then. Even if their fees was zero% you'd already make a loss on offering anything like 50% off. Loss leading risks like this are probably best left for a time when the company can afford to take a hit like this.
It probably works well for things like hotels and service industry.
What industry are you in out of curiosity?
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Just one other point on Groupon - cashflow!
You'll be last to receive payment on the deal with Groupon, they take their commission first, and have been known to keep a small amount back for refunds (depending on the offer in question), so you'll find yourself having to stump up for goods/services that you're only getting a 50% commission on, then having to wait at least 28 days for your money to arrive.
It's one thing to have a loss-leader for quick cashflow, but a loss-leader combined with slow cashflow? I'd look through the numbers very carefully, it might tip your company into the abyss.
You'll be last to receive payment on the deal with Groupon, they take their commission first, and have been known to keep a small amount back for refunds (depending on the offer in question), so you'll find yourself having to stump up for goods/services that you're only getting a 50% commission on, then having to wait at least 28 days for your money to arrive.
It's one thing to have a loss-leader for quick cashflow, but a loss-leader combined with slow cashflow? I'd look through the numbers very carefully, it might tip your company into the abyss.
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I have heard better percentages than you getting 50% from 50% off such as a few colleges who were offering daft RRPs and then offering 80% off but taking 80% from the offered price, leaving Groupon with 20% (equating to £20 in this example).
However, each time I revisit the potential of running a Groupon advert, I cannot ever find a way to translate a heavily discounted first offer into a repeat purchase.
To my mind, it is like someone wanting ketchup but whereas I may only buy Heinz and welcome the discounted price with future purchases at full price, I tend to think Groupon buyers would buy any old ketchup as long as it was heavily discounted but worryingly, they would only buy at a large discount or otherwise go without.
However, each time I revisit the potential of running a Groupon advert, I cannot ever find a way to translate a heavily discounted first offer into a repeat purchase.
To my mind, it is like someone wanting ketchup but whereas I may only buy Heinz and welcome the discounted price with future purchases at full price, I tend to think Groupon buyers would buy any old ketchup as long as it was heavily discounted but worryingly, they would only buy at a large discount or otherwise go without.
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arcon5
Your markups should be much higher then. Especially considering you will have commercial inkjet and the labour intensively.
I was actually in this same industry, manufactured canvas prints for trade and consumers and had a shop - and a 30x20"x18mm deep frame would cost £6, sold for £25-£30 but places like boots and Jessops charge about £60. A4 cost about £2 to complete, or about £1.60 if sent to print in pairs on 24" 100% cotton canvas (including the cost of the stretcher bars an clear gift wrap to protect them in)
I think you should reevaluate your business model and see if you can turn it around.
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Jessops ain't sellin' nothing anymore
They're back. Peter Jones bought them out, back trading on the high street and with a new website.
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I think you will struggle to do well on Groupon for the photo to canvas type business.
Restaurants etc can be a little smarter - offer the deal but don't include drinks so they can upsell. But with a photo to canvas service I'm not sure what deal you can do that is appealing and can still make you money.
Unfortuntately whenever spending drops these are the first type of businesses to go.
Used to be photo to canvas pop up shops in every shopping centre, don't see them as much anymore. It's One Direction cardboard cut outs for £30 that are the big sellers now.
Restaurants etc can be a little smarter - offer the deal but don't include drinks so they can upsell. But with a photo to canvas service I'm not sure what deal you can do that is appealing and can still make you money.
Unfortuntately whenever spending drops these are the first type of businesses to go.
Used to be photo to canvas pop up shops in every shopping centre, don't see them as much anymore. It's One Direction cardboard cut outs for £30 that are the big sellers now.
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Well the one near Monument tube in the City was locked up good and tight the other day.
As to the name Jessops being back, I guess I could resurrect British Leyland, The Coal Board and the South Sea Company if I wished but none would have much to do with their previous incarnations
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arcon5
Well the one near Monument tube in the City was locked up good and tight the other day.
As to the name Jessops being back, I guess I could resurrect British Leyland, The Coal Board and the South Sea Company if I wished but none would have much to do with their previous incarnations
Our local one is also closed, I know many was exclude from the deal.
But what you suggest isn't what's happened with Jessops, they are staying in the photo industry. But maybe Jessops wasn't a great example - Kodak instead
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16 Jessops stores have reopened so far and I believe there are plans to reopen more.
http://www.jessops.com/storefinder
http://www.jessops.com/storefinder
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SimonLongster
Spoken to a lot of companies that use Groupon. I can't believe they make these offers and then don't build a list and market to that list - surely makes sense to try and get some repeat business from these clients. That way they can still make offers but not give Groupon 50%. Build a list and market.
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