The Golden Age of Groupon is upon us…
The question is, for how long?
Comments section skeptics aside, businesses across Kansas City have taken advantage of Groupon’s email blast, deal-of-the-day marketing propostions. It’s not about undermining the value of a product by giving away the farm for half price. In less than two years here, Groupon’s forged the image as a proven means of reaching hundreds of thousands of locals with offers they can’t resist. Offers that work for both the biz and the customer.
It’s that simple.
However we may be nearing the turning point.
As in too much of a good thing.
"A guy from the Star called and they’re trying to do it now," says Jardine‘s jazz club owner Beena Brandsgard. "They’re going to launch a separate thing in May. He said there were like 17 of them out there now."
Who isn’t out trying to con businesses into selling stuff for half off and giving them a piece of the action?
There’s Lucky Monkey, Muncharoo – even a company called Hello GoodBuy! The former owners of the Pitch were hatching a half-off scam. What Groupon unleashed and perfected, every goofy-sounding wannabe in the book is now out there trying to imitate. And to some extent it’s an easy sell. Or at least it has been.
No out of pocket for the advertiser, just give the customer half off and the marketing company half of the other half.
Or maybe a little less.
"It’s even shifting as we speak," says one local marketing firm exec with extensive experience with Groupon. "You get six deals now instead of just one with Groupon. So the format of one deal a day is changing already."
Even some companies that have had excellent experiences with Groupon are rethinking the proposition.
"Now that the economy is improving, a lot of people are just saying, ‘I don’t want to do any discounting,’ " the marketer says. "And because there is so much competition now, Groupon is doing six deals at a time and they’re going to run out of businesses. Because you really only should do one or two of these maximum per year."
As for local immitators, "I would think that Muncharoo or Lucky Monkey are going to be calling people who have already done a Groupon and they’re going to say, no thanks. People who have tried Groupon and who aren’t about to do a lesser service than Groupon and get an even lesser response."
Speaking of which, size does matter in the world of email blast discounting…
Somebody at Groupon screwed up and sent Jardine’s March Groupon deal to only 15,000 emails instead of 150,000, Brandsgard says, So instead of the 1,600 or so deals she got the first time out, Jardine’s got only 200 takers and change. To make up the difference, Groupon sent out another Jardine’s blast this week.
Back to the competition…
Given a choice between Muncharoo or Lucky Monkey and Groupon, "I’m going to do the sure deal," the local marketer says. "Why would I go with 30,000 (emails) instead of 300,000 with Groupon? And Groupon is starting to discount deals like the smaller players. I just can’t see how people like Muncharoo can get a meeting with a business because in all probability somebody at Groupon has called just about every good business here – Groupon’s poring over everything.
"So if somebody was going to do a deal, they’ve (probably) already talked to Groupon unless they didn’t call Groupon back. Maybe there are enough new businesses or businesses Groupon doesn’t want to deal with to keep some of these (imitators) going. But I wouldn’t want to be one of the companies selling against Groupon."
why?
Why would any business give up 87.5% of the asking price of anything for anyone? Any of these gimmicks are a rip off for the business, it’s employees and the customers who have been around for a while, let alone filling the dineing room with low paying grinches who don’t tip for full value.
IPO
Groupon is putting together IPO …reportedly valued @ $15- $20 Bil. ?
So now everyone can put their money where their mouth is.
My deal of the day today was for mulch? Usually its for some kind of spa.
In last 3 months I have only received 2 or 3 dining offers.. the thrill of a big wad of cash VS. feeding 2,000 on the back end for free will wear thin.
As far as getting some kind of extra benefit from the email advertising..I would be way more inclined to read print ad in Star than to wade thru all that online. This really is some wild west kind of market. #’s get thrown around…from 15,000 to 300,000(?) well what is it? If they have 300,000 good clean email addresses that don’t go to multiple household users I would be pretty surprised.
Poop on the Group
Like any idea that can’t be protected by IP law the online discount biz has become the wild wild west. It’s becoming a commodity. There will always be someone who will figure out a way to execute better, cheaper and faster. Margin’s erode, profits fall, employee’s get frustrated and bail, just like the newspaper biz.
groupon is just an 21st century evolution of the Entertainment coupon book. Instead of buying a ton of coupons, most of which you won’t ever use…you buy one use-it-or-lose-it coupon. You decide on a case-by-case basis, so you have total control of where you spend your money (instead of “well, I don’t want to go here, but we have a half-off coupon”).
From a business owner’s standpoint, each one has to decide whether the benefit of discounting outweighs the risks. If groupon doesn’t bring people in, a business will move on to some other marketing tactic. Why all the hand wringing about groupon when discounts and short-term sales and special deals for new customers are as ubiquitous as Craig Glazer girlfriends?
Groupon
I still have a bone to pick, so to speak, as Groupon never delivered on the Steak and BJ Day offer.
groupon fading
offers now suck and their down 34%……fad
Wrong, wrong and wrong.
They sell the Groupon for half – that’s 50 percent discount to the customer At most they give up half of the 50 the business keeps to Groupon. At most. Second, if they do it right they price it so Groupon buyers overall check will be higher – often far higher – so they’re at 100 percent on that part. Third, they’re reaching out to hundreds of thousands of potential customers who will read the Groupon as an ad and may remember the biz and visit it in the future.
Finally, have you not been keeping up? Unlike the buy one get one Star Card and old school giveaway deals, Groupon customers tend to be younger, hipper, more clued in and excellent tippers. That’s what the restaurants are reporting. Oh and in many cases Groupon buyers become repeat customers at full price.
There’s a box here. Your mission: think outside of it!
Some good points, bschloz.
One reason Jardine’s limited its Groupon this time and won’t be doing another until next year is they don’t want to get slammed. On the other hand, if you go to Jardine’s, pay a $5 cover, eat dinner and have two or three drinks each, you’ll spend far more than $40 – as a couple.
Not everyone will fully read each Groupon ad, true. But people are signing up because they WANT to look these deals over, so they’re more likely to give ’em a closer look see than skimming past page-after-page of ads in the Star or magazines.
When I skim the Star, I’m mainly looking at headlines and stories and miss a lot of the ads. Not all and not always, but a lot. Probably most. I subscribe to the Star for the stories mainly, not the ads.
I mean, think about it. I don’t need any hearing aids, sex enhancements or siding deals and I’m not sitting on a bunch of gold and silver thinking about selling. But that’s just me.
Well said and nice kicker
Must be lonely at the bottom…
NPR Groupon Story
NPR aired a good story on Groupon a week ago. The report notes there are now over 400 daily deal sites. You can hear it at
http://www.npr.org/blogs/money/2011/04/08/135244697/groupons-secret-everybody-has-their-price
An extended version of the story, including a study on the impact of Groupon on businesses and when it is and is not effective, is here:
http://www.npr.org/blogs/money/2011/04/08/135248177/the-friday-podcast-groupon-monty-python-price-discrimination
Gratzie. Somewhat obviously, it’s not for everyone. And that’s where Groupon excels. The smaller, local imitators will take more-or-less anybody they can get. And whatever it takes to make a deal. But there are good Groupons (well thought out and structured ones) and not so good ones. Oh and bad ones.
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