Groupon sounds like the greatest idea since the invention of coupons themselves, and for
consumers, it is. But Groupon has actually bankrupted some small businesses in the United States that have promoted with Groupon while other businesses have endured months of trying to recuperate from the deal. Why? Because Groupon is a company that the small business contracts with for the daily deal and Groupon receives half the deal proceeds. The small business typically agrees to give the product or service for half off normal price. Groupon promotes the deal with an initial buy in quantity and time frame of 24 hours. At the end of the deal, Groupon splits the money and sends it to the small business and the business now has an influx of customers for a 75% discount.
consumers, it is. But Groupon has actually bankrupted some small businesses in the United States that have promoted with Groupon while other businesses have endured months of trying to recuperate from the deal. Why? Because Groupon is a company that the small business contracts with for the daily deal and Groupon receives half the deal proceeds. The small business typically agrees to give the product or service for half off normal price. Groupon promotes the deal with an initial buy in quantity and time frame of 24 hours. At the end of the deal, Groupon splits the money and sends it to the small business and the business now has an influx of customers for a 75% discount.So if a massage therapist agreed to a one hour massage that is normally $50 for $25 and she said that ten have to sign up for the deal to be valid, she would have to give 10 massages for $25 each, but she would only receive $12.50/massage because Groupon gets their share for promoting it. That’s 10 hours of massages for $125. But, typically if a Groupon deal is made, there are far more than the initial 10 who would sign up that the massage therapist could be stuck doing a whole year’s worth of massages for just $12.50. That could potentially put her out of business.
In fact, here is an article for a marketing result with a helicopter school where the groupon deal didn’t go so well for them.
At this writing, the inaugural Gainesville Groupon deal is going on with Blue Highway. So far, they have sold over 270 deals of $20 worth of pizza for $10 and Blue Highway will only see $5. Now I love Blue Highway’s pizza and I love their new location in Town of Tioga and as much as I love a good deal, I won’t be participating in this because I want to support them in ways that won’t hurt their business. Restaurants might do better with this kind of deal, because patrons will likely spend more than $20 on their pizza bill, but for the small service oriented businesses out there, I can’t see it doing well for them.
Other people will likely want to say that this could just be the cost for acquiring a new customer, but typically there are two types of customers with the Groupon deal. The first type is the customer that already patrons the business and would probably go back for a more modest discount. The second type of customer that the small businesses think they are getting are the ones that are going solely for the Groupon deals and won’t likely become a loyal customer to anyone except the deals themselves.
Now that doesn’t mean that I’m not a fan of saving money but in a time when small businesses are being seen as the backbone of the US economy getting back on track, here are better ways to make the consumer happy, and still helps the local businesses:
Email List: Many small businesses send out email lists of daily or weekly specials. I currently receive emails of specials from local businesses like Northwest Seafood, Bush Gator Transmission and Auto Repair, and Gentle Waters Healing Center just to name a few and I see some pretty good deals that the owners give out with them.
Facebook: A lot of local businesses are getting their names out there and offering deals up just for their Facebook fans. Find a business you frequent and become a fan of theirs to see what kind of deals they offer or suggest it for them.
Support Local Charities: We have some wonderful charities in Gainesville and great charity events where many local companies donate a product or service where the proceeds go to the charity. You can get good deals and help out wonderful non profit organizations at the same time. Check out the local Home: Living in the Heart of Florida Magazine for their charity of the month and any upcoming events to support a charity.
Ask for a deal: Most of the time, just asking for a discount with get you one with the business. You can even use your group buying power the old fashioned way. Last summer, five of us who wanted a bike went to Mr. Goodbike and negotiated a discount on the bikes because we purchased them all on the same day. We got great bikes from a great local shop and they had a pretty good sales day.
What other ways can you think of getting a good deal without hurting your favorite local business?
Web Design Companies, Gainesville, FL