Why Groupon Is Poised For Collapse. Editor’s note:This guest post is part of an in-depth series looking at the daily deal industry written by Rocky Agrawal, an entrepreneur who has worked on local products since 1995.
Read Part I, Part II, and Part III also. He blogs at reDesign and Tweets @rakeshlobster. Imagine you’re a small business owner. You have to choose between two propositions: You can pay $62,500 for marketing. I’ve been working on local for a long time and I know it’s hard to get small businesses to spend money on advertising. There’s no way a business will sign up for #1. Except they are. Although they sound completely different, #1 and #2 are really the same—it’s the Groupon business model. Businesses are being sold incredibly expensive advertising campaigns that are disguised as “no risk” ways to acquire new customers. Groupon is not an Internet marketing business so much as it is the equivalent of a loan sharking business. In many cases, running a Groupon can be a terrible financial decision for merchants. Groupon Was “The Single Worst Decision I Have Ever Made As A Business Owner”
Editor’s note:This guest post was written by Rocky Agrawal, an entrepreneur who has worked on local products since 1995.
He blogs at reDesign and Tweets @rakeshlobster. “How much is your average sale here?” “It’s about five dollars.” That one question told me Jessie Burke had been sold an unsuitable product. Her average sale was $5 and her Groupon rep had convinced her to run a Groupon for $13. I already knew how the story ended. I wanted to drill deeper and get at the why. Part 1 – Part 2 – Part 3 – Part 4 – Part 5 Some of the key takeaways: Jessie found about Groupon from a friend who saw that the pizza place across the street was full after running a Groupon. One of the things I’ve really struggled with in writing this is the potential for readers to view Jessie as ignorant or worse by the Silicon Valley elite. That couldn’t be farther from the truth. She tried reading through Groupon’s merchant agreement, but it had too much legalese for her to understand. Online-coupon firms: Groupon anxiety. Deal Me In: Behind the Bargain-Hunting Audiences of Local ...
Drawing on two major trends—hyperlocalism and budget consciousness—daily deal sites in the U.S. have changed the business landscape, shifting how consumers search for bargains and connect with businesses large and small, national and local.
With new daily deal sites entering the fray on a regular basis, The Nielsen Company took a look at the audiences of two major players, Groupon and Living Social, and what online couponers really want. U.S. Audience Profile: Groupon and Living Social Visitors to Groupon and Living Social are similar in that nearly two-thirds are female and more likely than the average U.S. Internet user to be affluent. Although the audiences to both sites share a similar gender and socioeconomic split, there are notable differences in the age and geographic location of their U.S. visitors. What deals to offer? The Social Incentive.