Having a hard time seeing how this is Groupon's fault. Maybe a better job reminding business owners not to offer more coupons than they can actually support?
Well, the basic economics of giving away too many coupons is definitely the core of the problem, but it looks like Groupon aggravated it somewhat.
By taking a high cut and targeting discount-minded (rather than repeat-custom-minded) clientele, the $8000 basically went down the drain, and the business experienced more headaches dealing with testy Grouponers than they would normal clients.
Part of this is a learning experience about what you offer as a discount, how you offer it, and who you target. Instead of offering half-price cookies, offer half-price vegan cookies or similar. Do a smaller test first (though maybe Groupon doesn't allow that?) so you can get an idea of repeat rates and discount-hungry one-off customers.
The word of mouth gained from this one campaign may well echo forward for months to come, but it's still sad to see a business struggling when a site like Groupon is supposed to be fantastic for both parties involved in the transaction.
This is what confuses me. Shouldn't the split have been determined before the contract was signed? I don't understand how they could have made a deal with Groupon, but not worked out who would keep what percentage.
Based on the author's blog post, the split was determined beforehand, but Groupon did not allow them to set an upper bound on coupons sold. This seems to be a recurring story - business owners willing to take a loss for marketing via Groupon, but with no effective ways of controlling an upper cap for this loss.
The part that really tuned my brain anti-Groupon in this article was:
Groupon sold consumers a $13 Posie’s credit for $6, and then sought to keep the entire $6.
I mean, that's a 100% cut with the business getting nothing. If that's serious, Groupon look unethical; if it's not, then the coffeeshop is lying (and others have doubted the sincerity of the figures, too, as well as their ability to run a business full stop). Either way my mind is slightly twisted to dislike Groupon now. Subtle!
