In order to stimulate interest, businesses are told they have to discount goods and services by at least 50 percent. Even deeper discounts of up to 80 percent are encouraged. On top of that, the group buying site keeps as much as 50 percent (more perhaps?) of the amount the merchant brings in.
You do the math. If you offer a deal of $20 for $40 worth of goods or services, then the group site keeps as much as 50 percent of the amount sold, does that make sense?
Oh, but it’s advertising. Right, I get that. And if you’re advertising budget is big enough, or the margins on your products are high enough, it makes sense. You don’t lose your shirt with every sale. But, not every small business is the Gap. Quite to the contrary, most of us work on minimal ad budgets and thin margins.
One small business, Poises Cafe, lost so much money the owners had to dip into their personal savings to cover what they claim was an $8,000 loss! The owner called it a “terrible decision,” one that was made at the objection of her husband. Consider not only the strain this placed on their business, but their personal lives as well.
Paul Chaney has done a good job addressing the Groupon dilemma here. Personally, as a consumer I love Groupon, but as a small business owner I have a lot of other options that are free or much cheaper. You can follow the ‘via’ link above to read the rest of Paul’s article — comment below or ‘connect’ above to discuss how this applies to you and your organization…