Jan 12, 2012

Groupon – friend or foe?

I just read a piece by Chicago business writer David Wolinsky entitled: Groupon Sinks Another Business.

This characterization is completely unfair to Groupon

What is happening is that some small businesses, already on the brink of insolvency, are signing on with Groupon in the hopes of enhancing business. And Groupon delivers on its promise; which is to drive business to these establishments. The way they do that is to deeply discount the establishment’s product or service, making it more attractive to the consumer. The expectation is that by giving away a deeply discounted sample of that product/service, the establishment will gain a customer that will return to pay full price over time. Instead, Groupon often drives bargain hunters who are only interested in a 1-time “deal” to floundering establishments.

A number of businesses have not only not experienced the desired “turn around”, they have come undone as a result of participation with Groupon. The article referenced the “infamous cupcake incident“.

At the end of the day, we are all responsible for our own actions. Anyone who opens a business must do so with eyes wide open. We are risk takers by opening our doors. Sometimes the risks yield rewards; many times, sadly, they do not.

The article does close with these words, “Folks should slow their roll and not assume a Groupon is mandatory, or a save-all salve for an ailing business. Run the numbers. Calculate the risks. Don’t rush into it.”

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