You may have received a pile of Groupon offers yesterday, but one sale the company did not want you to see was their stock 50 percent off their first day highs and well below the initial IPO price of $20.
Marketers have had mixed results with Groupon, including many who have lost money, causing growth of the company to stall.
As Huffington Post noted:
“Since its public debut, Groupon has failed to make a big splash of any kind. A major new feature, which is key to delivering relevant offers to the right consumers, was lamely supported by an amateurish YouTube video featuring two product guys. And today, the company didnít really feature anything special for Cyber Monday except for offering discounts on a few recommended gifts. Meanwhile, its next closest competitor, LivingSocial, pulled out all the stops by offering gift cards to major online retailers, such as one from Blue Nile that gave shoppers the opportunity to spend $200 for $100.”
While the company is still worth more than the $6 billion it turned down from Google, if the company can’t move forward and improve the customer experience it could fall below that number.
The big problem is the amount charged by Groupon on top of the deep discounts they want to entice buyers. Add to that the fact Groupon profits on each sale, and their motivation to suggest limits or less discounts is obscured.
Caveat emptor – let the buyer beware. You need to have your own marketing plan and negotiate – learn a little about how best to use the service.
One story from the BBC may impact sales in the UK. A woman lost over 12,500 pounds (a little under $20,000 U.S.) selling cupcakes! The BBC reported:
Need a Cake offered a deal of 12 cupcakes with a choice of flavours and designs for £6.50, which would normally cost £26. It received 8,500 requests as a result, substantially more than its usual production level of about 100 a month.
The company, which employs eight people, had to bring in agency staff to try to meet the upsurge in demand.
Ms Brown estimates the extra costs of staff and distribution could be up to £12,500, wiping out profits for the year.
Bad publicity isn’t what they company needs right now as they seem to be facing competition from everywhere. Google Offers, Facebook Deals, Amazon Daily Deals are just a few jumping in to the already crowded space.
Groupon CEO Andrew Mason was worth $1.3 billion when the company went public – his share now is valued around $715 million.