Loading ...As one of the newest hotspots online, Groupon is growing at an exponential rate. The company even featured an ad in the Super Bowl, although it has sparked some controversy. However, there are some issues with the service that are causing businesses to ask if it is really beneficial.
For starters, the service is a “one trick pony,” according Brian Combs of ionadas. As he explained to WebProNews, the idea of getting a bargain is what drives people to Groupon. People do not go there to check their email or for other services as they would on Facebook.
Another area that could be a problem for some businesses is the lack of control that the business itself has. For instance, Groupon writes the ad copy based on reviews they see, and it also controls when the ad is placed.
“The levers you can pull are somewhat limited,” said Combs.
Some businesses might see this as a load off of them, but other businesses like directing their marketing message and timing. Issues of meeting demand and being efficient could arise as well since businesses don’t know when their promotions are going to run. Businesses have to make sure that their phone systems could handle a potential surge in calls, their websites could handle an influx of traffic, and their internal systems could provide all the products and services in a timely manner.
Businesses also need to be aware of and plan for the waiting period before it receives its cash. Groupon collects the money, takes out its share, and then issues businesses their check later.
For businesses that do use Groupon, Combs stresses the importance of tracking results. In addition, he points out that businesses need to have a plan for following up with customers to try to turn them into repeat customers.
Incidentally, Groupon’s funding round that was released in January has brought up another reason for long-term concern. Although it brought on some impressive new investors, the funds of this round are reportedly going to be used, in part, to provide liquidity to early investors. If this is, in fact, true, it raises concern knowing that people want out of the investment.
On another interesting note of news regarding Groupon, the company is reportedly planning to go public with an estimated value of $15 billion or more. You might remember that Google attempted to buy Groupon last year for an estimated of $6 billion. However, now Google is allegedly working on its own couponing service that is thought to be called Google Offers.
Combs believes that this could be a challenge for Google since the search giant doesn’t have a sales force and prefers automated transactions. Small businesses, especially, like to have relationships with businesses that they work with and have the ability to easily contact them.
“Google doesn’t have anything like this, and I don’t see them building such a sales force,” he said.
In spite of this pitfall, he went on to say that he could see Google Offers getting some traction from businesses that are content with self-service models.
“Whether that will grow to the point where it’s material to Google’s bottom line remains to be seen,” added Combs.
Based on these facts, are these couponing offerings more helpful or harmful to businesses?
Pingback: WebProNews: Is Groupon Helping or Hurting Businesses | ionadas local LLC
Good discussion. We talked about that atour blog a couple times.
http://www.vbnf.com/blog
Good business model but consumers should be careful on the service provider to make sure they can delivery the goods and quality before go belly up and then lose all the purchases.
Service provider should look at that as the budget for Marketing and not for making money for short term.
Its really hurts the business. I heard lots of business closed down after taking the money
We hate this model. Because we paid full price for it and after a week its half price. Whoever bought it earlier become a dumb
I never step into that business who has advertised on groupon. because we know the business is ripping off people
you never know what you are getting into 50% off. The restaurant person may be pissed off with the CHEAP customers and he will spit on the food before he give to us.
The customer you get thru is one time “CHEAP” customers. I am business owner who ran an ad thru groupon. The customer gets the deal and start looking for another. Its pathetic model.
Groupon Clone is really hot business today influenced by the success of Groupon. My friend tried his own business in the mode of Groupon Clone, and has been successful, he got the technology from the company Joomabc . It is a terrific experience.
Great comment. We do belive that this model will hurt business. Business owners should be smart enough to manage their advertising and/or promotions without above named company (no need for extra advertising of their name)
Well that was a good read.
Some businesses might see this as a load off of them, but other businesses like directing their marketing message and timing. Issues of meeting demand and being efficient could arise as well since businesses don’t know when their promotions are going to run. Businesses have to make sure that their phone systems could handle a potential surge in calls, their websites could handle an influx of traffic, and their internal systems could provide all the products and services in a timely manner.
I actually have now ended up inside of traffic generation for a several years and my own partner keeps recommending to me that our team really should consider (blank) voice broadcasting being any way in order to create qualified prospects. I simply just find this difficult to be able to trust the fact the idea realistically works best. Everytime My spouse and i receive one of these phone messages I personally merely hang up at once but yet this guy promises that it provides a incredibly inexpensive strategy to bring in qualified prospects. I am nevertheless on the fence but I am aware that our other models our company is making use of are merely getting alot more (blank) expensive.
What would be a way Groupon (or a company like them) would be worth working with? How could they help the business. It is easy to point out a problem. You have an excellent point, I would be really interested to see what you could come up with for a solution.
Getting your deal on Groupon can reach a massive number of customers. Small businesse need to be prepared for the deal launch. What are your objectives, work our your margin and profit, do you have enough inventory or staff to meet the demand? A lot of things needs to be considered. If well prepared, Groupon or other daily deals or group buying sites will help your business a lot.
I have no problem with groupon it is saving me quite a bit of money.
It is hard to tell whether groupon is here to stay or not. Only time will tell, but their over valued IPO is interesting. I agree with Paul on this one.