Groupon and Living Social can kiss my...

[theclemsonkid]

As some of you know, I am a small business owner. Every few months a get a call from "the new sales rep" from either Groupon or Living Social (or one of their dozens of spawns). First, a little breakdown of how these scumbags operate.
They will call you, and say, "would you like to get your business out there to thousands of potential customers for less than the cost of conventional advertising, guaranteeing that you get your product in peoples hands?!?" Of course on the surface, like any good scam, that sounds wonderful! The problem is all in the fine print.
First off all, these sites will offer your product for 50% off minimum, or more sometimes. So already your product that sells for $20 has to be offered to the general public for $10. Ok, that's not terrible, because most people in a good business have about 25% or so in cost, and the rest is profit. So sure, I might only be making $10, but it only cost me $5 to make. WRONG. You forgot about your labor costs, keeping the lights on, travel costs, etc, etc. Then, this is where it gets REALLY good. The lovely folks at Groupon will then charge you an additional 50% of your remaining money to them for their "fee".
So let's break this down:
1. You sell a product that costs $20.
2. You offer said product for $10.
3. Of that $10, Groupon takes 50% of that, leaving you with $5.
4. You just agreed to put your product on the internet, to sell for $5. The same product that costs you $5 to produce.
5. You lose.
Not only do you lose because you don't make a dime off the sale (and in some cases lose tons of money), but you also get to deal with the "coupon crowd". The people that Groupon promises will come back time and time again, are coupon cutters. You know the next time you will see them? When you offer your product for half off again, and that's it.
There was another local business near me that just about went out of business because of a LivingSocial deal that lost him almost $12,000. Everytime I hear one of these stories I want to scream.
PLEASE DO NOT SUPPORT COMPANIES THAT PREY ON STRUGGLING SMALL BUSINESSES.
*p.s. - The best part about this is that a few years back, Google offered Groupon $6 BILLION dollars to buy them out, and their pompas owner told them no, so he could have an IPO. Well sir, your company is now worth about 16% of what Google offered you. Hope that tastes good!

 

[beth]

So, no laws broken by these scammers?

 

[theclemsonkid]

Quote:
Originally Posted by Beth http:///t/393055/groupon-and-living-social-can-kiss-my#post_3493833
So, no laws broken by these scammers?
Nope, not at all. It's just shady techniques. It's the same as when I used to work at this place as a sales person for a company that sells "Amish Fireplaces". You may have seen the ads, they used to run full page ones in the USA Today, and Parade inserts. They promised to "cut your heat bill by 80%" in HUGE letters, then in tiny print buried on the bottom it said "saving based on moving portable heating element to whichever room you are in, and closing all vents in other rooms when unoccupied". They also had these huge ads that said "FREE AMISH MADE FIREPLACE MANTLE" and would show the picture of the Amish man "making" the fireplaces. Just call the number and you get your free fireplace. Which is true, if you bought the Chinese made $228 insert that goes with it. 98% of the calls I took were people thinking they were getting a free fireplace.
There are SO MANY SCAMS out there, and no legislation to do anything about it. And you know why? Because these scammers make millions of dollars from this crap, and then get in the politicians back pockets. The guy who owned the company I worked for (before the FBI raided him) had a huge hung and signed picture of he and GW Bush on his office door. Makes you go hmmm...

 

[bionicarm]

I've heard good and bad things about small businesses that have used Groupon and LivingSocial for deals. There's a local pizza parlor that tried it once, and the owner told me that he may have increased sales and return customers by around 3%. He didn't lose anything out of the deal, but he said he'd never do it again.
Seems larger businesses or national franchises usually do come out ahead. I've seen my local Marble Slab Creamery do Groupons at least 5 times. If they were losing money on it, you'd think they wouldn't offer it so many times.
I've also purchased multiple Groupons from a local Oil Change shop. He seems to love the thing. He's kind of unique in the way he does things - you don't get out of your car during the service, and he even brings you a soda or bottled water while you're waiting. The shop isn't on a major thoroughfare, and most of the individuals in the area didn't know he existed before they purchased the Groupon. Every time I go by that way, I always see cars lined up waiting for service. Don't know if they're using Groupons, but I haven't seen another one for his shop in quite some time (I get local Groupon updates in my email every day).

 

[theclemsonkid]

Quote:
Originally Posted by bionicarm http:///t/393055/groupon-and-living-social-can-kiss-my#post_3493835
I've heard good and bad things about small businesses that have used Groupon and LivingSocial for deals. There's a local pizza parlor that tried it once, and the owner told me that he may have increased sales and return customers by around 3%. He didn't lose anything out of the deal, but he said he'd never do it again.
Seems larger businesses or national franchises usually do come out ahead. I've seen my local Marble Slab Creamery do Groupons at least 5 times. If they were losing money on it, you'd think they wouldn't offer it so many times.
I've also purchased multiple Groupons from a local Oil Change shop. He seems to love the thing. He's kind of unique in the way he does things - you don't get out of your car during the service, and he even brings you a soda or bottled water while you're waiting. The shop isn't on a major thoroughfare, and most of the individuals in the area didn't know he existed before they purchased the Groupon. Every time I go by that way, I always see cars lined up waiting for service. Don't know if they're using Groupons, but I haven't seen another one for his shop in quite some time (I get local Groupon updates in my email every day).
Yeah I figure for the big players you who have multi million dollar advertising budgets, it's no skin off their back. I'm just talking about the local folks around here. I personally have known five people who have done it, of which three are out of business and the other two said it was the worst marketing mistake they ever made.
It might be a regional thing too, because here in Canton, Ohio there isn't a lot of extra money to go around, so you have armies of people who will only do things with coupons. It's even the same with my business. I have one single coupon out there that's "Buy 3 cupcakes get 1 free" which runs every eight weeks. And sure enough, every eight weeks its the exact same people who come in here with their coupons, and I know I Won't see them again till the next coupon comes out. It's really kind of a shame that coupons have ruined a lot of quality businesses because unsuspecting people flock to the bottom of the barrel businesses who give their stuff away because its so cheap and easy to make... as opposed to quality stuff.

 

[reefraff]

Quote:
Originally Posted by TheClemsonKid http:///t/393055/groupon-and-living-social-can-kiss-my#post_3493836
Yeah I figure for the big players you who have multi million dollar advertising budgets, it's no skin off their back. I'm just talking about the local folks around here. I personally have known five people who have done it, of which three are out of business and the other two said it was the worst marketing mistake they ever made.
It might be a regional thing too, because here in Canton, Ohio there isn't a lot of extra money to go around, so you have armies of people who will only do things with coupons. It's even the same with my business. I have one single coupon out there that's "Buy 3 cupcakes get 1 free" which runs every eight weeks. And sure enough, every eight weeks its the exact same people who come in here with their coupons, and I know I Won't see them again till the next coupon comes out. It's really kind of a shame that coupons have ruined a lot of quality businesses because unsuspecting people flock to the bottom of the barrel businesses who give their stuff away because its so cheap and easy to make... as opposed to quality stuff.
You should do an advertising campaign around the TV show "Two Broke Girls".

 

[darthtang aw]

I have ran 3 groupons with my business. Been very successful due to it. I will explain further when I have more time. I will say you are looking at it with the wrong prespective.

 

[theclemsonkid]

Quote:
Originally Posted by Darthtang AW http:///t/393055/groupon-and-living-social-can-kiss-my#post_3493842
I have ran 3 groupons with my business. Been very successful due to it. I will explain further when I have more time. I will say you are looking at it with the wrong prespective.
I will be looking forward to it!

 

[darthtang aw]

Ok, I have ran three groupons. All half off deals of course. This is the cheapest form of advertising I can get and guaranteed that the entire customer base in the area will see it. Advertising elsewhere for a decent size add would run me 1000 dollars a week, and I get squat off that. even lesser viewed rags cost minimum 500 a month...and that might get you a bit of return.
I run my groupon for the service side of the business. all i am really out on for the money is supplies. Each groupon I have ran i have not sold less than 200 groupons each time. I have seen 1/3 of them come through and two of the groupons are expired. So basically I run an add and make my normal profit margin for the most part. Groupon people forget they buy them half the time.
The ones that do come in, 75% of the time end up buying other stuff as well once they are in my business. You place limiations on the groupons...keep this in mind. No more than one used at a time. No multiple purchases...no gift groupons, etc. You can tailor it to suit you very well. You just have to think a bit before jumping on board.
I have not lost money doing Gropupon and several that came in turned into repeat customers....
It is a building tool, nothing more. If you want or need the exposure and some growth, then do it. If you don't, tell them to pound sand.
But to call this a scam...No...it is no different than advertising.
Hard goods generally are not a good fit for groupon unless you have overstock inventory you are trying to blow out.

 

[theclemsonkid]

Quote:
Originally Posted by Darthtang AW http:///t/393055/groupon-and-living-social-can-kiss-my#post_3493988
Ok, I have ran three groupons. All half off deals of course. This is the cheapest form of advertising I can get and guaranteed that the entire customer base in the area will see it. Advertising elsewhere for a decent size add would run me 1000 dollars a week, and I get squat off that. even lesser viewed rags cost minimum 500 a month...and that might get you a bit of return.
I run my groupon for the service side of the business. all i am really out on for the money is supplies. Each groupon I have ran i have not sold less than 200 groupons each time. I have seen 1/3 of them come through and two of the groupons are expired. So basically I run an add and make my normal profit margin for the most part. Groupon people forget they buy them half the time.
The ones that do come in, 75% of the time end up buying other stuff as well once they are in my business. You place limiations on the groupons...keep this in mind. No more than one used at a time. No multiple purchases...no gift groupons, etc. You can tailor it to suit you very well. You just have to think a bit before jumping on board.
I have not lost money doing Gropupon and several that came in turned into repeat customers....
It is a building tool, nothing more. If you want or need the exposure and some growth, then do it. If you don't, tell them to pound sand.
But to call this a scam...No...it is no different than advertising.
Hard goods generally are not a good fit for groupon unless you have overstock inventory you are trying to blow out.
Yeah I guess I should have prefaced that. If you offer a service, and all you are actually using is either time, or a tangible skill, then maybe it isn't terrible. I just know people on the food side who have tried it almost ALWAYS get killed based on costs of food and labor...