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0 pointshakfoo10mo ago0 comments

I had always heard what killed Groupon was the bad economics.

The "loss leader" concept is Business 101, and Groupon was presented to customers as a gallery of loss leaders they can shop.

Actually delivering a good loss leader is hard. Design the offer wrong, and people don't attach properly-- they either don't load up their cart with additional, higher-margin items, or they don't return for future full-price services. I suspect Groupon didn't help-- if they provided consulting, it was probably to steer the merchants to give the store away to make Groupon look compelling regardless of bankrupting the merchant.

Over time, a lot of industries pulled away, either because they personally ran the numbers or simply saw their peers trying it and losing their shirt. The offers eventually retreated to what could survive in the cost structure: stuff like classes (near-zero marginal cost per attendee) rather than food or personal services with significant cost of goods or labour.

0 comments

blitzar10mo ago

They bringing a large pool of customers who will only ever pay "loss leading" prices. The ultimate problem with Groupon is their customers.

nothercastle10mo ago

And the volume of people caused the good customers to get shitty service so it was basically impossible to make it work. Also it was a mega loss leader since Groupon took a huge cut

SkyPuncher10mo ago

And as customers, I quickly realized that businesses didn't actually want me there either. I was a distraction to their actual profitable customers.

ghaff10mo ago

For me, it was one of those businesses that, as a consumer, you realized was sort of a novelty but the coupons weren't really really worth it and they were a PITA to use a lot of the time. And once the novelty wore off, they sort of slipped off your radar and weren't worth thinking about any longer even if there might be an interesting deal here or there.

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