Shoppers love Groupon. Retailers…not so much. It’s easy to see why. You offer your product or service at a deep discount to grab users’ attention. Then Groupon pays you about half that discounted price. Then a zillion Groupon shoppers come into your store so you have to sell out all your inventory at that teeny-tiny price. Then none of them ever come back to buy anything at full price.
The secret to loving Groupon is, “Don’t be stupid,” according to ZDNet blogger David Gewirtz. In other words, calculate carefully exactly how much of a discount it makes sense to offer–and then don’t offer more than that. If you don’t you could share the fate of his correspondent in London who owns a gourmet cupcake shop. She and her employees wound up killing themselves churning out 102,000 cupcakes for Groupon customers at a loss of about $3 each.
Read more at ZDNet.
