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Archive for the ‘Business’ Category
Yesterday, Groupon announced a partnership with concert promoter giant, Live Nation, for an online ticketing marketplace known as GrouponLive. The site will offer limited time deals to Live Nation events in the style that has captivated impulse-buyers around the U.S. over the past few months. Surely by now you’ve seen your friends talk about purchasing Groupons (or similar deals through vendors like Living Social) on sites like Twitter and Facebook, or perhaps you’ve purchased one yourself in the past. According to research from ComScore, traffic to Groupon’s websites (there is a sub-site for targeted deals in different major cities) has risen 657% since October 2009.
The combination of buying products or services, saving and being able to share the deal on social media has already proven to be a winning combination, but who is really benefiting? The creation of GrouponLive has been dissected as an obvious attempt to breathe life into the live music industry’s flagship summer concert season after a disappointing 2010. Group-buying sites like Groupon have always lended a helping hand to industries that thrive off of crowds looking to do something new. With everything from summer concerts to helicopter tours, these sites are driving web traffic and cash to these companies and Groupon, but ultimately it seems like only Groupon is the one with a smile on their face in the end.
Take for example my one and only encounter with the site. There was a special for an oil change at an auto-repair place right down the street from where I live, it seemed like it couldn’t have been easier to pull off. So I bought it, made an appointment which I had been warned would take a while because the business had been so overwhelmed with people cashing in their Groupons. I dropped my car off and when I picked it up that night, my car starting making odd noises it hadn’t before. As it turns out, this business had been so overwhelmed with the business coming in from the online deal, that they were understaffed and pretty much rushing each job for people using their coupons. In their carelessness, they forgot to plug something back up (I don’t know car details, if I did I would change my oil myself and I wouldn’t be writing this blog out of spite) and I ended up making a trip to the dealership to correct the mistake. This isn’t the only case I’ve noticed of local businesses partnering with Groupon in hopes of boosting sales and revenue only to come out shortchanged and overworked.
The best example of this was Posies Bakery & Café in Portland, OR. In a detailed blog post, the manager of the business explains that the demand from the Groupon left the business overwhelmed, while the percentage they ultimately were paying back to Groupon for hosting the deal hurt them so bad they couldn’t even make payroll for three weeks. Now it’s true that a lot of businesses don’t realize the effect of mass coupons, such as Groupon, until they’ve experienced it.
But overall, the smaller the business, the less likely they are to do a second go around with Groupon. The cost of hosting a deal and the percentage given back to the online dealer is seemingly overpriced and never carefully explained to those running the campaigns for the businesses. Is it the trendy aspect that is making Mom and Pop shops all over the country indulge? Or is it the false promise that this internet giant can spread word of mouth overnight and have a line out the door waiting for you in the morning? Whatever it is, most businesses haven’t been left smiling.
The most effective alternative we’ve seen for smaller businesses is to run a social media based, coupon campaign. Offer discounts to those who check-in on Foursquare, comment back or “Like” a Facebook post, or those who retweet a message. Socially-based discounts are better for small businesses because they increase engagement and spread awareness at no cost to the business itself. It’s the ideal way to spread word of mouth and to establish a business as being a leader in customer service and deals. So I say leave social-coupon sites like Groupon to the bigger brands and let Mom & Pop shops all around start engaging and interacting so the consumers can start saving.