After seeing these statistics on the Groupon Blog, I started to wonder if this is more marketing than reality. The percentages shown are extremely aggressive if the numbers truly represent all Groupon Events including both product and service based businesses.
These numbers would start to make sense if only businesses offering services such as seats for a bus tour or boat cruise were polled. The cost for a service basically remains a constant. Adding more people increases the profit for the service. This should be a Win-Win for all.
On the other hand, if the business is providing a deliverable such as a meal or hand crafted or purchased object with fixed material and labor cost, the Groupon Event cost will make the sale unprofitable. Groupon takes 50% of the sale and the business needs to reduce the price by at least 50% to make it attractive to the group of buyers.
When you sell a product for less then it costs, the business cash flow is impacted in the short term and over long term. If this is the case, why would a business jeopardize their business to get a few more customers at a big loss? Effective marketing programs focused on their local customer base is not expensive. Is anyone watching the metrics?
I would like to see the metrics used to publish the satisfaction data on the website. Again, is this just more marketing or is this the truth? Has anyone seen the Groupon Event metrics used to justify their data?
Merchants are not happy...Are the buyers?
GROUPON BUSINESS MODEL IS FLAWED?
A Groupon happens between a Merchant and Buyers. - No Merchant! No Groupon!
1. Merchants Loose?
75% off existing Selling Price didn`t make sense, but inflating the price does. Caveat Emptor!
2. Buyers Loose?
Multi State Class Action Lawsuits accuse Groupon of selling gift certificates with short expiration dates.
If Groupon comes apart before the IPO, is it worth doing an IPO?