If you own any retail business or sell anything directly to consumers you should be paying attention to what is going on over at Groupon. Collective buying has always been the holy grail for the cost-conscious consumer, but many bad group-buying experiences have tarnished this genre. It is often thought that only unsellable, leftover goods are sold via group-buying channels.
Groupon is aiming to legitimize this genre, and is getting very close to being the company that finally hits the tipping point. Launched in November 2008, Groupon features a daily deal on the best stuff to do, see, eat, and buy in a variety of cities across the United States. There aim is to bring deals on restaurants you want to eat at and activities you actually want to participate in. A quick glance at a couple of cities across the U.S. shows they are so far doing a good job with this.
Despite their claims that they provide 50-90 percent off it appears that most deals hover around the 40-50 percent range, which is fine if the offers provided are of quality. If they can provide me with an opportunity to buy a gift certificate to my favorite restaurant for even 40 percent off, then that is worth it to me.
So Groupon appears to make sense on the consumer front, but what about for your business. Why would you be interested in selling a gift certificate for 50 percent off? The answer lies in how they handle the minimum sold. You can set minimums for each item you sell as part of their Daily Deals. This way you can guarantee that you sell 100 or 200 or even 1,000 of those $50 gift cards, which suddenly makes this a valid revenue source that is worth the time it takes to setup. Groupon claims that their customers end up spending 60 percent more than the value of the Groupon.
3 Reasons Your Business Should Consider Using Groupon
- You sell gift certficates for any of your products
- You are having difficulty reaching a younger demographic for your business
- You are trying to generate more and better word-of-mouth interest about your business
2 Reasons You Wouldn’t Use Groupon for Your Business
- You have a very low margin on your products and can’t afford potential deep discounting
- The target market for your business is older than 55 (3 percent of Groupon’s audience) and you are not interested in bringing this age down