thoughts on group deals

[rob the knob]

now that group deals have been popular for some time, what do you guys think?

my experiences have been so so and i didnt even have high expectations with most deals. i think these group deals will disappear. Groupon is probably now already regretting turning down $6 billion from Google.

heres problems i see:
-first problem is the overall structure of the deal for the merchant. merchant offers deal of 50% to 80% off. then groupon (or whichever deal site takes on average of 50% of selling price.) lets do the math. Assume regular price for what you are selling is $100. Merchant sells deal for $50. Groupon takes half of that so merchant gets $25. Merchant now offers $100 of goods or services for $25.

-i think most merchants dont do the math and dont see what theyre getting themselves into. if you are a minigolf place or bowling you could do offer like above because you may often have excess capacity so any revenue coming in is good revenue. if you are restaurant, hair dresser, massage, or cleaner, then i dont see how the math works. you are relying on getting someone in the door and them spending more money in addition to the groupon on that visit or they come back because they like your place.

i think many groupon users are cheapskates and go to your restaurant or use service just because of cheap deal and will never come back. maybe 1 in 10 may. thats too few i think to make the deal worth it for the restaurant.

-many services i mention sell too many groupons. how does massage place or cleaner or grass maintenance sell 1000 coupons and expect to offer top notch service? or even complete service in reasonable time?

-plus you have to pay employees? look at massage deals. $80 massage for 50% off. so clinic get half of the $40 = $20. does clinic still pay massage therapist regular hourly rate and clinic loses money or does clinic and therapist split the loss? doesnt make sense.

-oh yeah, i get poor service from restaurants and other services i use because i use groupon. if company expect to use groupon to attract new customers then give good service.

ahhh. im stopping ranting now. my thought, for example, for restaurant, it would make more sense to put sign out front that says, 30% off on Thursday (or whatever). Then you attract locals who drive by your place and then more realistically come back if have good experience. plus you only down 30% rather than 90%. with groupon, you get cheapskate who drive across town then never come back.

[austic]

I agree on alot of it. My experiences soo far have been a let down. The maid services are the worst....

[Marsh]

I agree. Personally the only deals im keen on looking for are the fitness ones, like the 30 classes for 30 bucks for MMA, yoga etc. Those are really stellar deals and haven't had any issues with them.

[Disoblige]

Restaurants I find aren't that bad. But you are right, in many cases the customer likely will not be returning.

But the point is, if you are trying to attract RETURNING customers and spread the word about your business, then offering poor service just kills you and you're losing money.

And the places offering services, like maid cleaning, detailing, lawn services. Many are offering so much but can't deliver on it. I am turned down by these deal coupons, and will only purchase restaurant coupons. I'm sure the businesses know this too but still go ahead offering all those services. Pretty selfish IMO. Then, the business relies on the "good deal" so people won't complain since it was good for the price, but you're not really getting the full value of the coupon.

So OP, I agree with what you said. It's on the minds on a lot of group deal users, I'm sure.

[Kloubek]

I don't think the value to the merchant is as much about the actual sale of item/service as it is getting people familiar with their business. Think of it as part of an advertising budget. They could pay a media outlet X amount to try to generate business (which may or may not work) but this is *guaranteed* business.

And if the customer has a good experience, they might come back, or tell their friends. I think this is generally what the merchant is hoping for.

Now, if these businesses find that customers are *not* coming back, then it is just a matter of time before the whole concept is pretty much defunct since word will get around quickly enough.

Edit: Oh hey look - Disoblige pretty much said the same thing....

[skandalouz_08]

I got a groupon for 900 minutes at a golf dome, I think it is a great deal, makes me go there and possibly bring friends. Although I love going by myself, I know others who would prefer to go with someone, so they make their money off the extra people coming in the door.

I do agree though, I've only bought I deal so far and its because I actually would go there regularly anyways, I don't buy a deal just because its "cheap".

[ddduke]

Another thing that many companies do is over value the product. I spoke with the people from groupon last winter and explained to them how I could not turn a profit if i offered my winter product for that drastic of a discount. They then told me to over price my product so even after someone gets a "huge discount" I'm still turning a profit.

I guess this only works for some business'. Completely different story when it comes to restuarants.

[polarice]

I have only had one bad outcome so far and it is for a spa deal I bought in January as a gift. The company sold over 2000 coupons and said we couldn't book until May. Fine, wait a few months but then they cancelled the appointment with a days notice. To begin with the company was extremely hard to get a hold of (would not pick up phone, or return messages). Similar situation now, and the owner will not refund the money and is unable to rebook the appointment. She claims dealfind screwed her over because she sold too many. :rolleyes:

Her company isn't even active in Alberta, so I wonder what they're actually operating under.

Now I am in the process of sorting it out with dealfind. Judging by this woman's business sense she is hoping people just cancel and not bother pursuing the matter.

[Agent_Oorange]

A lot of those deals go unclaimed, people simply forget about them after they get caught up in the initial excitement of the purchase. Up to 30% or so last numbers I saw, free money for the merchants in that case, or at least some degree of offset to the redeemed deals if they are running at a loss.

[GingeRRRBeef]

Originally posted by Agent_Oorange
A lot of those deals go unclaimed, people simply forget about them after they get caught up in the initial excitement of the purchase. Up to 30% or so last numbers I saw, free money for the merchants in that case, or at least some degree of offset to the redeemed deals if they are running at a loss.

That's not true. I was going to do the deals thing for my dog daycare but when I looked into it, the merchant only gets money if the voucher gets redeemed. So if 1000 coupons get sold @ $25 and only 100 is redeemed. The merchant only gets $1250 and the site gets $23750. Huge huge profits for the site.

[natejj]

I've had pretty good experiences. Most of the restaurant ones have been great, the gym/classes one have been good. The discounted meat was also a great deal. I pick and choose carefully and book ASAP.

[kaput]

.

[max_boost]

The only ones that I've successfully used frequently are the food ones, Seoul, Teatro, Fujiyama, sushi Motto, Anju etc.

I don't Bother with the other services. I just rather pay full price on the cleaning deals and the other services are out of my way.

The cash flow issue is probably why that NW sushi restaurant decided to only permit 5 vouchers a day lol and they sold 4000? Haha I guess they didn't want to just collect vouchers all day and no $$$ coming in. I don't understand why these places don't put a cap on the number they sell.

[Guillermo]

Originally posted by kaput
What confuses me is that there doesn't seem to be any way of tracking or validating the vouchers at most places. Often all they have is a spreadsheet with names and voucher numbers and they check a box when they get used. It would be very easy for a company to claim a voucher had already been used and deny it, whether intentionally or accidentally.

maybe they keep the vouchers and have to send them in, kind of like coupons? :dunno:

[Disoblige]

You know what's funny is that Global News had a segment on how some of these group deals are completely garbage because the place couldn't deliver what was promised.

More often than not, the place offering services (i.e. time consuming services like car detailing, lawn services, etc) or places that offer goods by the pound (i.e. butcher places) advertise more than they can deliver.

Greedy greedy.

[Tik-Tok]

Originally posted by Disoblige
You know what's funny is that Global News had a segment on how some of these group deals are completely garbage because the place couldn't deliver what was promised.

More often than not, the place offering services (i.e. time consuming services like car detailing, lawn services, etc) or places that offer goods by the pound (i.e. butcher places) advertise more than they can deliver.

Greedy greedy.

That's why I only get the restaurant ones. It's awesome for that.

[Pahnda]

^^

There was something that went big in Japan a while back. There was a boxed set meal for new years on group-on and the pictures used were far from what people got. So they pretty much ruined people's new years meals. The group-on CEO apologized and they refunded everyone's money though.

Here's some shots from the site and what one family got:

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Not my video, but sorry for the crappy music anyway.

Now a lot of people I know are really skeptical about discount sites, some because of that incident. The only time I used group-on I was not very impressed.

Edit: thanks for the fixes from the people below. I tend to mess up my embedding... >.<

[supe]

I agree with some/most of what has been said. This is not about revenue for the business, it is straight up marketing/advertising costs and for the most part it works IF you provide a good product/service.

Carstairs golf just ran a deal that sold 2500 vouchers, now tell me those people won't return because its an amazing course that some people probably would never hear about otherwise.

[realazy]

Originally posted by Pahnda
^^

HI6u99YRYXQ&



fixed

[Guillermo]

Originally posted by Pahnda
^^

There was something that went big in Japan a while back. There was a boxed set meal for new years on group-on and the pictures used were far from what people got. So they pretty much ruined people's new years meals. The group-on CEO apologized and they refunded everyone's money though.

Here's some shots from the site and what one family got:

HI6u99YRYXQ

Not my video, but sorry for the crappy music anyway.

Now a lot of people I know are really skeptical about discount sites, some because of that incident. The only time I used group-on I was not very impressed.

LOL, what they got was half the size of the picture :rofl:

[Xtrema]

Groupon and other deals are too aggressively priced.

If the saving is bit more realistic that can sustain businesses, there will be less backlash.

[sillysod]

Advertising is very expensive. Some companies choose to go groupon route instead of spending big $$$ putting up ads and mailing out literature.

A 1/2 decent advertising campaign will cost a company thousands and thousands of dollars up front. This way they get $$$ in the bank right away and then the costs only incur as customers redeem their vouchers. This they can basically amortized over a period of time.

The concept is good and if companies would treat it as an advertising cost instead of a cash/customer grab it probably would work.

Unfortunately - in my past experiences - these companies tend to treat you like a discounted customer, and because of that the entire point of these promotions is lost. This has the potential of branding companies that use groupons as providing inferior services causing their intended targets (clients willing to pay full fare) to look elsewhere.

[assram]

Groupon
Groupon itself will last, do you realize they make over 50 million a month? This is what they were making when Google made their offer, they have only grown since.

There are literally dozens of sites that offer the same discounts now because there is money to be made. RFD deals, wagjag, kijiji deals, livingsocial, dealfind, etc... If you can count on one thing about humans, they like shopping.

Merchants
Many of these restaurants are trying to attract new customers. They can either spend $10-$20k to advertise with flyers / commercial / billboards, or pass that discount to customers, who may or may not return. And if they come and spread the word onto their friends, that's the best form of advertisement. But yes, if they miss their opportunity to show their top service / food, then it's their own fault and will probably fail in due time anyways.

Also remember a smart company will take the discount and use it as a WRITE-OFF expense in its book-keeping to save on taxes.

Many groupons have expiry dates. I read a research paper years ago where under 70% of gift cards actually get used. Big companies were making so much money off of unused cash giftcards (especially around holidays) that it was made illegal. However, putting an expiry date on a service is completely legal.

When to buy
Honestly, when buying groupons, stick to restaurants you know, or read reviews about the restaurants first. Read the fine print.

I've used many groupons on vacations/cupcakes/ ebay/old navy/ tailor/ drycleaning/ sushi/ alcohol / west ed waterpark / mma classes / yoga classes and have no complaints.

You can't honestly say every new restaurant you've tried has been an amazing orgasmic experience, but at least you could've saved 50% off your bill.

Re: Jap video
Any commerical won't be exactly like its food. Look at any fast food joint. I'm actually surprised the Japan Groupon CEO refunded the money, I think that showcased the power of the social interwebs.
http://www.youtube.com/watch?v=WZaaqRjjGI0

[HyperZell]

This is a great read for the whole Groupon thing:

http://www.newsbackbone.com/uncategorized/former-groupon-employee-describes-high-pressure-tactics-culture-and-merchants-freaking-out.html

[rob the knob]

i dont want to poop in the deals thread so i put this here now:

deals are getting crappier. seems like many crappy spa or beauty type. anyone buy laser and do hair removal and then make a deal to save $5000.

[Mar]

I just used one at Get Pierced in Kensington yesterday, dropped by, showed them the voucher and got in right away. I got $100 worth of piercing for $29 which included the piercing itself and an extra barbell to swap in later. It's a great deal for me and it only took them 5 minutes plus a piece of jewelry that likely cost them $2.

[Guillermo]

i've noticed the deals are getting worse, too. i actually haven't seen an interesting one in a couple of months now. i'm sorry, but I'm not interested in yoga classes or laser tag experiences. :rofl: