Groupon seemed like a great idea at the time, and I used it frequently for deals. What is the business model not working these days?
back
8 comments
Groupon was funded by the participating businesses, and the promised growth didn't occur for them.
I personally only ever used it for a discount at businesses (restaurants) I already went to. It was lose-lose for them on my purchases, but at least I still went afterwards.
Many Groupon customers would just use the coupon, and never return. This is a total loss for the business, because the coupon was often below cost for the restaurant. Note that the only things that really remained forever is the things that had nearly no incremental cost for the business to give out (free trial for SaaS-style things).
Not Groupon specifically, the whole concept died off. Here's why I stopped using the genre:
1) Deals are not good. That is, the price reduction is not real or comes with reduced service.
2) Problems with honouring the purchase. The experience is not as purchasing something at reduced price from the shop, you need to go through separate process and the vendors act as if you forced them to sell you the deal. Some try to upsell a bit too hard, degrading the experience if you refuse. Some claim that your coupon is not valid and you need to deal with customer service to resolve issues.
3) Social stigma. It's uncool to take someone somewhere with a coupon, so all the deals for two are not good.
And as others have noted, it also often isn't great for businesses either; it tends to attract price-sensitive customers who are willing to put up with all of the above for some savings and many won't be repeat customers at regular prices.
Definitely. Everyone was greedy, the customer is trying the pinch a penny and the vendor tries to screw the customer since doesn't expect repeated business.
IMHO it could have been like a trail session, have it been framed correctly. Instead, it was structured as race to the bottom from every side.
Which became a self fulfilling prophecy in my experience: you buy a deal on a personal service like a hair salon, the staff assume you won't be a repeat customer so they give you terrible service which does not inspire you to return.
Everything you guys say rings true to me. It ended up not adding a great amount of value for either businesses or consumers, and without true added value there's no revenue bite for Groupon.
The stigma of using a coupon didn't bother me so much, most restaurant servers were always cool about redeeming them (and of course I always tipped on the pre-Groupon bill.) But I would sometimes get an (unintentional) negative vibe from higher ups, like great another money-losing customer that I'll never see again. That reaction is what discouraged me from using Groupon, if it just ends up generally being a bad proposition for businesses I'd rather just avoid the whole thing.
Oh man, this reminds me I still have a much of credit at Restaurant.com, which I stopped using a few years ago too...
I'm not sure it's so much a "stigma" from using a coupon as an additional step you need to at least make sure the server is aware of. And there are probably circumstances like early dates where coupons may send off vibes you don't want to send off.
But, yeah, online if there's a new customer discount or a periodic 20% off one item discount I'll use it to buy something I would probably have bought anyway. For most in-person things, I don't go out of the way to find/use coupons unless it's a very transactional thing like a museum admission.
Social stigma really? Weeeeeird I feel like it’s almost the opposite, getting a Groupon is a good excuse to go do something with someone. “Hey I’ve got a Groupon for this place, wanna stop by and help me use it up?”
Maybe it depends on the relationship you have. Probably there wouldn't be a stigma when done with close friends.
As someone who worked for a daily deals business not long after Groupons inception, I can tell you that it’s a tough model. It trained customers to wait for deals or targeted the wrong type of customers. In some cases businesses took losses or razor thin margins in the hopes of attracting what they thought would be new recurring business. But the reality was that the customers attended/purchased once and then moved on to the next deal. Businesses were often just giving away product for free. The timing for Groupon was perfect. It was 2008 when businesses were struggling and customers were price sensitive. But ultimately I just don’t think it was a good marketing tool for businesses.
No moat, easy to copy. Restaurant and retail partners figured out that low-margin Groupon customers don't convert into normal ones.
The ones that stayed in business did. Discounting for businesses is like a drug, easy to get addicted and rarely ends well.
I stopped using them because the vendors always made me feel guilty about it, and occasionally would also skimp on the services on top of the guilt trip. Groupon should have done more to manage that, like taking customer complaints seriously regarding these practices.
Around us, it really quickly stopped being "deals on real things" and "pre-buying cheaply made crap to hit the price point".
For example, most of the restaurant coupons didn't apply to the real menu, and was usually a "special menu" that consisted of whatever cheap crap they could toss together for pennies (always pasta) and the worst bottle of wine they could source. After getting burned a couple times on that we never went back.
The equivalent of a custom-made Black Friday TV model so Best Buy could claim "60 inch LCD TV for $199".
Eh it never really made sense as a business. The concept was discounts to get new customers. But that's not really a sustainable business. Either it works and the business gets the customers they needed or it doesn't. The first is a problem because there's only so many local businesses and the second is obviously bad. The net result is that they burned through their suppliers and the deals went from steep loss leader discounts to "discounts" that really aren't discounts.
I mean... maybe it was not that bad an idea, but did it really seem like a 17 billion idea to you?
yes because i still have no idea where to get my car detailed in a seamless way. I can search on google, read reviews, call and make an appointment. But thats not what i want to do.
Groupon sold itself as OS for local commerce. I see that as a 17 billion idea.
Back in the day we had a phone book. Too bad I haven't seen one in almost twenty years.
oh didn't know phonebooks had reviews and scheduling back in the day. nice!