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Disclaimer: I work for a sustainable deal site for local businesses. One factor that hbr is not mentioning is business owners (national and local) that partici

Disclaimer: I work for a sustainable deal site for local businesses. One factor that hbr is not mentioning is business owners (national and local) that participate on Groupon, for the most part, are having bad experiences. Obviously this depends on the industry (sky dive plus all around, coffee shops down all around) but not all industries can live off of 25% of their goods sold. I know many local business owners who ran a Groupon and promised themselves that they will never Groupon again because of the poor customer experience, and the large financial loss per Groupon. The scale part is what worries me. I don't think Amazon needed as much money as Groupon needed to scale which is the biggest worry. At some point, the financial well will dry up on Groupon. When that happens, I don't know what will become of Groupon. Maybe they should have taken the purported Google deal of a buyout for $6 billion :).

Rariel 15y ago
If you don't mind me asking, who do you work for and what makes the deal site sustainable for local businesses?
- phereford 15y ago
  Sustainable means it doesn't hinder the business like a 50% off coupon and a 25% split on the revenue thereafter. Most local businesses cant afford that and realize it too late. The company I work for is thegolocalcard.com (won't plug it again on Hacker News...I promise).
  - Rariel 15y ago
    How funny! I love golocal in Austin! You guys rock, really great company and concept. I like to use mine at Quacks.
    - phereford 15y ago
      Haha! Money! I am developing an iPhone app for them and helping start GoLocal in Boston :). The GoLocal Austin people are awesome and a half :)
pbreit 15y ago
> business owners (national and local) that participate on Groupon, for the most part, are having bad experiences My understanding is that Groupon's satisfaction rate is well above 50%. It seems that everyone forgets that, at worst, this is an advertising expense that guarantees revenue and foot traffic.
- phereford 15y ago
  It is 100% dependant on industry. Ask any retailer if a Groupon makes sense when they depend on the margins their products produce. The only way it makes sense is if they are able to get large volume discounts on whatever they are trying to sell. Just running some #s here. Local clothing ship buys jewelry for $5/piece and marks it up to $15. Groupon takes 75% of the $15. Groupon takes $11.25 out of the $15 and you just lost $.25 on the entire deal (not including expenses to find that piece). Sure that same retailer could mark the piece up to $20 but groupon takes $15 of that and you break even. A $5 piece probably couldnt be sold for anything higher than $20... I will agree that it generates foot traffic but most smaller businesses I have talked to who have done a Groupon or thought about it have had negative experiences or choose not to do it because of a scenario similar to the one above I portrayed. Just my .02
  - pbreit 15y ago
    25 cents to get someone through the door is the best deal on the planet.
    - mgkimsal 15y ago
      It really depends on who that 'someone' is. A tire-kicker who has no intention of ever becoming a customer in the future, and just wants their 'deal' - no one wants those customers. Groupon doesn't seem to offer any way to segment or market your message/deal to subsets of people differentiated on any other signal besides those customers that "want a deal".
      - pbreit 15y ago

Rariel 15y ago

If you don't mind me asking, who do you work for and what makes the deal site sustainable for local businesses?

phereford 15y ago
Sustainable means it doesn't hinder the business like a 50% off coupon and a 25% split on the revenue thereafter. Most local businesses cant afford that and realize it too late. The company I work for is thegolocalcard.com (won't plug it again on Hacker News...I promise).
- Rariel 15y ago
  How funny! I love golocal in Austin! You guys rock, really great company and concept. I like to use mine at Quacks.
  - phereford 15y ago
    Haha! Money! I am developing an iPhone app for them and helping start GoLocal in Boston :). The GoLocal Austin people are awesome and a half :)

pbreit 15y ago

> business owners (national and local) that participate on Groupon, for the most part, are having bad experiences My understanding is that Groupon's satisfaction rate is well above 50%. It seems that everyone forgets that, at worst, this is an advertising expense that guarantees revenue and foot traffic.

phereford 15y ago
It is 100% dependant on industry. Ask any retailer if a Groupon makes sense when they depend on the margins their products produce. The only way it makes sense is if they are able to get large volume discounts on whatever they are trying to sell. Just running some #s here. Local clothing ship buys jewelry for $5/piece and marks it up to $15. Groupon takes 75% of the $15. Groupon takes $11.25 out of the $15 and you just lost $.25 on the entire deal (not including expenses to find that piece). Sure that same retailer could mark the piece up to $20 but groupon takes $15 of that and you break even. A $5 piece probably couldnt be sold for anything higher than $20... I will agree that it generates foot traffic but most smaller businesses I have talked to who have done a Groupon or thought about it have had negative experiences or choose not to do it because of a scenario similar to the one above I portrayed. Just my .02
- pbreit 15y ago
  25 cents to get someone through the door is the best deal on the planet.
  - mgkimsal 15y ago
    It really depends on who that 'someone' is. A tire-kicker who has no intention of ever becoming a customer in the future, and just wants their 'deal' - no one wants those customers. Groupon doesn't seem to offer any way to segment or market your message/deal to subsets of people differentiated on any other signal besides those customers that "want a deal".
    - pbreit 15y ago