I’m sure many of you are aware of what Groupon is and know what kinds of business they proportionate but what many of you don’t know is that it is not always rainbows and butterflies, at least not for everyone. For those who dont know Groupon, Groupon is a website which puts together a deal sometimes over 50% off of a good or service and they ask that a certain level of people is achieved so that the deal can be made. The result is, people get good deals with amazing discounts, GROUPON get 50% comission (which is a lot) and the seller get the other 50%. By setting the minimum limit Groupon guarantees a high number of customers for the company offering the service or good. I have to say i think it is a very smart idea to come up with something like Groupon. I would have loved to have thought about this idea. Unfortunately, I was reading a blog the other day and I saw how not everyone from this, at least not everyone who is aware of the possible risks.
http://www.retaildoc.com/blog/groupon-worst-marketing-business/
The Blog stated that Groupon was the worst retailing strategy for someone’s business. Personally I agree. How can you agree to sell your good or service for more than half of its value? I mean, ok you will make a lot of money if many people buy but there are so many costs and variables that need to be considered. Plus, you have to give 50 % of your profit to Groupon! FIFTY PERCENT! The seller ends up with very little. I mean, a whole economic case study and marketing study has to be made to aknowledge the costs and benefits but it seems pretty clear that some businesses are not going to be better off by Groupon.
Today I visited the Groupon website and realized that they were selling the UBC CANOPY WALKWAY in the UBC botanical gardens. I thought to myself, ” WOW, I went in there for free and people are paying 11 dollars per person to get in there. 1400 people already bought this deal meaning 15400 dollars in cash which is 7,700 dollars in clean money to GROUPON! In one day, in ONE city. Good job to the guy who created this website…..