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Groupon CEO re: their cut: “If we were economically rational, we would take even more.” http://venturebeat.com/2010/09/15/demo-the-secret-of-groupons-success-

by itblarg 16y ago

Groupon CEO re: their cut: “If we were economically rational, we would take even more.” http://venturebeat.com/2010/09/15/demo-the-secret-of-groupons-success-is-good-writing/ http://venturebeat.com/2010/09/15/demo-the-secret-of-groupon...

dasil003 16y ago
I immediately thought of this quote too. I see this as sort of a honeymoon for Groupon while people figure out how it really benefits (or doesn't benefit) their business. Over time their margins will probably drop considerably, so why shouldn't they take what they can get now? I can see how this sucks for small businesses who get flattened by the runaway train, but is it Groupon's responsibility to sabotage their own business model by performing due dilligence for their customers? From what little I know everything seems clearly above board.
- bugmenot 16y ago
  > I see this as sort of a honeymoon for Groupon while people figure out how it really benefits (or doesn't benefit) their business. Agreed. I find it striking that most Groupon offers don't really exploit the key feature of the site yet, viz. the "threshold system" which activates the groupon only after a certain number of users have pledged in. Groupon offers should generally be run by high-margin, capital-intensive businesses offering niche products, not small retail outfits. The OP was a coffee shop, an industry with high variable costs and low margins, so the groupon offer was prima facie inappropriate. But even cafes charge high markups on some niche "premium" products (in order to shift their fixed costs onto a price-insensitive customer base). Instead of targeting the discount on these relatively niche products--thus potentially attracting profitable repeat business--the cafe let the offer bear on their near-commodity offerings: coffee and cookies. How on earth was this a good decision?

by itblarg 16y ago

dasil003 16y ago

I immediately thought of this quote too. I see this as sort of a honeymoon for Groupon while people figure out how it really benefits (or doesn't benefit) their business. Over time their margins will probably drop considerably, so why shouldn't they take what they can get now? I can see how this sucks for small businesses who get flattened by the runaway train, but is it Groupon's responsibility to sabotage their own business model by performing due dilligence for their customers? From what little I know everything seems clearly above board.

bugmenot 16y ago
> I see this as sort of a honeymoon for Groupon while people figure out how it really benefits (or doesn't benefit) their business. Agreed. I find it striking that most Groupon offers don't really exploit the key feature of the site yet, viz. the "threshold system" which activates the groupon only after a certain number of users have pledged in. Groupon offers should generally be run by high-margin, capital-intensive businesses offering niche products, not small retail outfits. The OP was a coffee shop, an industry with high variable costs and low margins, so the groupon offer was prima facie inappropriate. But even cafes charge high markups on some niche "premium" products (in order to shift their fixed costs onto a price-insensitive customer base). Instead of targeting the discount on these relatively niche products--thus potentially attracting profitable repeat business--the cafe let the offer bear on their near-commodity offerings: coffee and cookies. How on earth was this a good decision?