Posted 17 September 2010 13:24pm by Patricio Robles:
When discussing Groupon, it's quite clear: the group buying business model is financially viable. For Groupon. What's less clear: whether Groupon's business model is financially viable for businesses.
One of the reasons it's not clear is that many -- if not most -- of the local business owners who have tried Groupon don't publicly reveal detailed results of their Groupon campaigns.
While some business owners have expressed questions about their Groupon experience, others seem very satisfied. But thanks to Jessie Burke, who owns Posies Cafe in Portland, Oregon, we know that what a Groupon-gone-wrong looks like. She expresses that Groupon nearly bankrupted her business.
Posies Cafe, a neighborhood coffee shop in Portland, Ore., was almost put out of business after selling nearly 1,000 Groupons this year, owner Jessie Burke said.
Customers paid $6 for $13 worth of products, but Posies received only $3 from every purchase after the split with Groupon, she said. Burke said her cash flow deteriorated so quickly that she had to inject $8,000 of her own savings to cover employee salaries and other expenses.
"Groupon can work for a lot of people, but it was not a good decision for us," she said. "The losses were overwhelming. I was just disappointed by it."
It's becoming quite clear that Groupon's large, loyal audience may not be as attractive to vendors as it is valuable to Groupon. A sizable portion of this audience (perhaps the majority) consists of individuals who are likely more interested in a bargain than they are in becoming a loyal patron to the businesses where they redeem Groupons. Read more HERE.
*image via Posies Cafe website.
Have you been considering Groupon to promote your business? What potential repercussions have you considered?