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Business owners really ought to know what their margins are. I feel bad for the ones who got pressured into bad deals, but they have to know what their literal

Business owners really ought to know what their margins are. I feel bad for the ones who got pressured into bad deals, but they have to know what their literal bottom line is.

dragonwriter 11y ago
The value proposition with Groupon is largely that you are selling a limited deal at promotional prices (i.e., ones which you would not be profitable sustaining) to build business. It was essentially, when it was novel, a new acquisition channel. Even business owners that new their margins wouldn't know its value to their business without testing it in their actual circumstances.
- CPLX 11y ago
  > It was essentially, when it was novel, a new acquisition channel. It also had a touch of loan-sharking from what I understand. I could be wrong about the exact details but I believe one of the main attractions was that a business could do a Groupon, and get all the money from the Groupons sold as soon as the promo was completed, but still have weeks or months for the customers to actually trickle in and claim the offer. Which may have led to a lot of the frustrations people had actually redeeming them, getting on the schedule for massages or reservations, etc.
  - dragonwriter 11y ago
    How is that "loan-sharking"? Seems to be pretty much just run of sale of redeemable credits. Loan-sharking means that someone is making money by charging high interest rates on loans -- here, the "loan", insofar as there is one, is effectively from the customer to the business, and there is no interest being charged on it.
    - CPLX 11y ago
      It was intended as a euphemism, not a literal example of loan sharking. But the analogy holds. Selling something for 20% of its value with the expectation of having to fulfill the order in a few months is effectively the same as paying an extreme rate of interest on short term business financing.

Business owners really ought to know what their margins are. I feel bad for the ones who got pressured into bad deals, but they have to know what their literal bottom line is.

dragonwriter 11y ago

The value proposition with Groupon is largely that you are selling a limited deal at promotional prices (i.e., ones which you would not be profitable sustaining) to build business. It was essentially, when it was novel, a new acquisition channel. Even business owners that new their margins wouldn't know its value to their business without testing it in their actual circumstances.

CPLX 11y ago
> It was essentially, when it was novel, a new acquisition channel. It also had a touch of loan-sharking from what I understand. I could be wrong about the exact details but I believe one of the main attractions was that a business could do a Groupon, and get all the money from the Groupons sold as soon as the promo was completed, but still have weeks or months for the customers to actually trickle in and claim the offer. Which may have led to a lot of the frustrations people had actually redeeming them, getting on the schedule for massages or reservations, etc.
- dragonwriter 11y ago
  How is that "loan-sharking"? Seems to be pretty much just run of sale of redeemable credits. Loan-sharking means that someone is making money by charging high interest rates on loans -- here, the "loan", insofar as there is one, is effectively from the customer to the business, and there is no interest being charged on it.
  - CPLX 11y ago
    It was intended as a euphemism, not a literal example of loan sharking. But the analogy holds. Selling something for 20% of its value with the expectation of having to fulfill the order in a few months is effectively the same as paying an extreme rate of interest on short term business financing.