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Yes, I used to work at Groupon. As one would expect, we tracked merchant satisfaction very, very closely. Most merchants were satisfied and most did repeat busi

by xiaoma 11y ago

Yes, I used to work at Groupon. As one would expect, we tracked merchant satisfaction very, very closely. Most merchants were satisfied and most did repeat business. Of course, it's usually the angriest people who are the noisiest and even in the case of very vocally happy merchants, it's not that exciting of a media story. Also it's worth pointing out that the value proposition for different types of businesses is wildly different. As you can imagine for an info product, Groupon is just like doing an affiliate deal with virtually no downside, for a high margin item like a spa it's excellent, and for something with very high unit costs, like a meal at a restaurant, the merchant has to be a lot more judicious about creating Groupons. I'm blown away by all the hate, though. Maybe it comes down to how good / aggressive the sales team is. From a merchant's perspective, Groupon should be treated like marketing. You don't spend so much money on Adwords that unit economics are bad without some plan to create repeat purchases on the back end. Why would promotional discounts be different?

unclebucknasty 11y ago
>Why would promotional discounts be different? There are several differences between Groupon's model and standard discounting/advertising. The spirit of these can primarily be summed up as "most advertising services don't compete directly on price with the clients for whom they are supposedly advertising." Groupon's product was its discounts, which it sourced from local merchants, then sold to its own customers. The businesses were not so much customers, but suppliers. However, the businesses paid Groupon for the benefit of supplying the product (the discount), and yet competed directly with Groupon when Groupon sold discounts for the restaurant across the street the following week. Now, here I have discounted deeply and taken a loss, however, I cannot compete with Groupon in my efforts to retain any new customers and recoup those losses. This is because Groupon encourages a certain customer mindset, based on demand for deep discounts. This is a demand which Groupon alone can endlessly satisfy because no individual competitor could sustain such losses. However, the aggregate loss of those businesses is the very source of Groupon's profit. In short, Groupon was actually a hyper-competitor to the businesses it was supposedly serving.

by xiaoma 11y ago

unclebucknasty 11y ago

>Why would promotional discounts be different? There are several differences between Groupon's model and standard discounting/advertising. The spirit of these can primarily be summed up as "most advertising services don't compete directly on price with the clients for whom they are supposedly advertising." Groupon's product was its discounts, which it sourced from local merchants, then sold to its own customers. The businesses were not so much customers, but suppliers. However, the businesses paid Groupon for the benefit of supplying the product (the discount), and yet competed directly with Groupon when Groupon sold discounts for the restaurant across the street the following week. Now, here I have discounted deeply and taken a loss, however, I cannot compete with Groupon in my efforts to retain any new customers and recoup those losses. This is because Groupon encourages a certain customer mindset, based on demand for deep discounts. This is a demand which Groupon alone can endlessly satisfy because no individual competitor could sustain such losses. However, the aggregate loss of those businesses is the very source of Groupon's profit. In short, Groupon was actually a hyper-competitor to the businesses it was supposedly serving.