It’s official. Groupon has filed with the SEC to “go public”.
In a time when mainstreet USA was struggling for business, Groupon rode in on their White Stallion and promised to bring business in the front door. They patted the small business owner on the head and said, “don’t worry…we’ll help YOU.”
Groupon offered to advertise your business for free. They said they’d even sell your stuff for you. They’d handle EVERYTHING for YOU. The best part is there’s NO RISK to you. If no one buys, it didn’t cost you anything!
If no one buys, you get FREE advertising from GROUPON!!!!!
But what if lots of people buy? What’s this “Groupon Effect” people are talking about?
Well simply put, when people buy your outragiously discounted and now commoditized wares through Groupon….Groupon will write YOU a check!!!
So to recap:
- Groupon advertises YOUR business FREE
- There’s “no risk” to you
- If no one buys your stuff, you pay nothing
- GROUPON will pay YOU if you sell your products or services
This sounds GREAT! What’s the catch?
- You have to dive on price which compromises your integrity
- The reduced profit is split with Groupon
- Groupon uses your name, brand and customer base to build their database to use later to market other businesses, and even competitors
- You risk alienating your loyal customer base
- You risk overwhelming your staff with an influx of non-local business
- You give deals and price breaks to strangers instead of your loyal customer base
- You lose over 50% of your profit margin
- You have to clean up the mess, while Groupon moves on to the next business
In short, your business is underwriting Groupon’s growth. They’re now selling shares for BILLIONS and you are still struggling to pay your CAM. You are essentially paying THOUSANDS of dollars for an email blast that should cost you pennies. Imagine paying $15,000 for an email blast.
But Groupon rocks other than that.
The solution? Build your own following one loyal customer at a time. Read 1,000 True Fans. Partner with other local businesses and cross promote locally so you can grow together, steadily. Forget the GRAND opening mentality. It’s easier to keep a customer than it is to get a new one. Love the ones you’re with and empower them to spread the word.
If you ran a Groupon, ask the board for some stock. You helped build Groupon.