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Groupon may be the one to bring them customers, and you're right, it's the merchant's responsibility to convert the incoming people to customers. However, Group

by jonpaul 16y ago

Groupon may be the one to bring them customers, and you're right, it's the merchant's responsibility to convert the incoming people to customers. However, Groupon should find a way to help with this. Because if they don't, merchants will continue to blame Groupon for the failures. If this continues to happen, Groupon will fail.

minouye 16y ago
Some anecdotal evidence, about Groupon's inability to make these deals "work" for merchants: This Saturday I went skydiving, and used a Groupon I purchased last month. The skydiving school had nothing but bad things to say about Groupon. According to the school, they were told that they would sell somewhere in the neighborhood of 200-300 skydives--they ending up selling closer to 1200. Now the fact that the number of Groupons wasn't capped at something more reasonable was most likely an oversight on the part of the merchant. However, Groupon's sales staff should have at the very least alerted the merchant to the potential risk. In this situation, it seems that Groupon was attempting to extract all possible value from merchant--Groupon had to have had some inkling that the deal was not going to be mutually beneficial. Can you extrapolate this to all merchants using Groupon? No, but the study results certainly didn't surprise me.
- joe_the_user 16y ago
  That doesn't really answer the point above. Did the merchant have a program in place to turn the one-time customers into continuing customers? If they did, more customers would have cost them more in the short run but helped them more in the long run. If they didn't, one would assume it was a failure regardless of the numbers. And did school waste the time they could have spent talking themselves up with talking Groupon down?
  - TheSOB88 16y ago
    The problem is that we're not dealing with completely rational, all-knowing merchants here. We're dealing with real life, and people have other things on their minds, like the pressures of running a business. If Groupon can't explain itself and how it differs from established marketing, the kind the merchants are used to, then it will fail. It has to provide value to real merchants. That certainly includes educating them about what is going on with their service, especially concerning the risks.
    - joe_the_user 16y ago
      It all turns on whether Groupon sells at commodity level or at a service level. If Groupon is selling group-discounts as commodity, then that it. It's your job to figure out how to use them. Google sells click-throughs and Home Depot sells cement. They might each be perfectly good but if you don't use them right, they won't do you any good. If Groupon is like personal trainer and provides ongoing value, then does need to assure that its buyers achieve success. Both business model-types can make money. Neither is going away. I don't know enough about Groupon to say which type they are.
      - ericd 16y ago
        Good point. Commodity business require sophisticated users - brick and mortar businesses are not sophisticated users of online marketing, so Groupon needs to be doing a better job at the service level.
  - qq66 16y ago
    The merchant also needs to know, "Am I in the business where an impulse buyer can be converted into a repeat customer?" I don't know what the user behavior is like for skydiving, but I can easily see it being the kind of thing people only want to try once. If you're in a business where impulse buyers don't convert into long-term customers, you need to find alternate channels for customer acquisition.
- jonursenbach 16y ago
  I thought that Groupon doesn't cap their sales?
  - johns 16y ago
    They say here that they do allow caps: http://groublogpon.com/cities/too-much-of-a-good-thing/ http://groublogpon.com/cities/too-much-of-a-good-thing/
  - djb_hackernews 16y ago
    They do, but they'll pass on sales if thats a requirement. They have a waiting list of customers. Imagine that. Another anecdote, my friends 1 year old small business approached Groupon to do a deal, they turned him away and told him to come back when he has more press.
  - slowpoison 16y ago
    I have seen Groupon deals with caps. Will append to this post once I locate it.
- prawn 16y ago
  Wouldn't surprise me, knowing quite a few small businesses, if they were told about the option to cap their sales, but ignored it ("How could more business ever be bad?"). Groupon have info online for merchants, advising them on how to deal with what they'll experience, but again it wouldn't surprise me if most merchants completely ignore it. People won't read instructions or advice unless you hold their eyelids open and force them to take it in. And small business owners (I'm one of them) are usually busier and more stressed than others, meaning we're even less likely to make use of such guides. Regardless it sounds like a great challenge for Groupon to have. I'd rather have a near-endless stream of customers in this situation, than be at the beginning of it all trying to attract anyone to the site at all.

by jonpaul 16y ago

minouye 16y ago

Some anecdotal evidence, about Groupon's inability to make these deals "work" for merchants: This Saturday I went skydiving, and used a Groupon I purchased last month. The skydiving school had nothing but bad things to say about Groupon. According to the school, they were told that they would sell somewhere in the neighborhood of 200-300 skydives--they ending up selling closer to 1200. Now the fact that the number of Groupons wasn't capped at something more reasonable was most likely an oversight on the part of the merchant. However, Groupon's sales staff should have at the very least alerted the merchant to the potential risk. In this situation, it seems that Groupon was attempting to extract all possible value from merchant--Groupon had to have had some inkling that the deal was not going to be mutually beneficial. Can you extrapolate this to all merchants using Groupon? No, but the study results certainly didn't surprise me.

joe_the_user 16y ago
That doesn't really answer the point above. Did the merchant have a program in place to turn the one-time customers into continuing customers? If they did, more customers would have cost them more in the short run but helped them more in the long run. If they didn't, one would assume it was a failure regardless of the numbers. And did school waste the time they could have spent talking themselves up with talking Groupon down?
- TheSOB88 16y ago
  The problem is that we're not dealing with completely rational, all-knowing merchants here. We're dealing with real life, and people have other things on their minds, like the pressures of running a business. If Groupon can't explain itself and how it differs from established marketing, the kind the merchants are used to, then it will fail. It has to provide value to real merchants. That certainly includes educating them about what is going on with their service, especially concerning the risks.
  - joe_the_user 16y ago
    It all turns on whether Groupon sells at commodity level or at a service level. If Groupon is selling group-discounts as commodity, then that it. It's your job to figure out how to use them. Google sells click-throughs and Home Depot sells cement. They might each be perfectly good but if you don't use them right, they won't do you any good. If Groupon is like personal trainer and provides ongoing value, then does need to assure that its buyers achieve success. Both business model-types can make money. Neither is going away. I don't know enough about Groupon to say which type they are.
    - ericd 16y ago
      Good point. Commodity business require sophisticated users - brick and mortar businesses are not sophisticated users of online marketing, so Groupon needs to be doing a better job at the service level.
- qq66 16y ago
  The merchant also needs to know, "Am I in the business where an impulse buyer can be converted into a repeat customer?" I don't know what the user behavior is like for skydiving, but I can easily see it being the kind of thing people only want to try once. If you're in a business where impulse buyers don't convert into long-term customers, you need to find alternate channels for customer acquisition.
jonursenbach 16y ago
I thought that Groupon doesn't cap their sales?
- johns 16y ago
  They say here that they do allow caps: http://groublogpon.com/cities/too-much-of-a-good-thing/ http://groublogpon.com/cities/too-much-of-a-good-thing/
- djb_hackernews 16y ago
  They do, but they'll pass on sales if thats a requirement. They have a waiting list of customers. Imagine that. Another anecdote, my friends 1 year old small business approached Groupon to do a deal, they turned him away and told him to come back when he has more press.
- slowpoison 16y ago
  I have seen Groupon deals with caps. Will append to this post once I locate it.
prawn 16y ago
Wouldn't surprise me, knowing quite a few small businesses, if they were told about the option to cap their sales, but ignored it ("How could more business ever be bad?"). Groupon have info online for merchants, advising them on how to deal with what they'll experience, but again it wouldn't surprise me if most merchants completely ignore it. People won't read instructions or advice unless you hold their eyelids open and force them to take it in. And small business owners (I'm one of them) are usually busier and more stressed than others, meaning we're even less likely to make use of such guides. Regardless it sounds like a great challenge for Groupon to have. I'd rather have a near-endless stream of customers in this situation, than be at the beginning of it all trying to attract anyone to the site at all.