Monday, April 4, 2011

my Groupon experience

I buy coupons on Groupon.com all the time. For some reason when I see a sweet deal on this website my brain says "why not?!" and I click the purchase button. They are so cheap and its such a great excuse to go out and do something I might have wanted to do.

Now I am as close as I'm gonna get to the seller end of the deal... its not my Groupon per say, but the studio where I teach that is selling a Groupon today. And its for a class that I will get paid to teach, so this is the closest I will ever get to the business end of Groupon - usually I am a buyer of these coupons! This is my big 5 minutes of fame being the seller.

Its pretty exciting selling a Groupon. I am a fan of the company. Brilliant business-model really. They basically take 50% of all money they make selling coupons (the other 50% goes to the vendor - although the deal is not actually as clean as that, but to make a long story short, we'll just call it 50/50). And they sell A LOT of coupons, so really, they make a good deal of money. In February of 2011 Groupon did $62 million in sales, in one month.

Evidently the owner was offered a buy-out deal from Google to the tune of 6 billion dollars, and he turned it down because he still has more vision for what he wants to do with the company. That makes me curious. This is a business-model that cannot protect themselves from being copied and there are already good competitors out there, in fact they have bought a lot of their competitors along the way.

While Groupon continues to grow wildly and make an insane amount of money quickly, it is not a great fit for many small businesses.

On Wiki the example they give for a failed Groupon is a coffee shop in Portland that was inundated with thousands of Groupon customers on the first day of selling the coupon and they simply could not handle the traffic. Wiki also sites that Gap sold over 400,000 Groupon coupons and their server crashed at the influx of traffic. Incredible.

However there are businesses that benefit from Groupon. Take for example the Oregon Coast Aquarium that is usually kinda empty, lots of nice volunteers waiting around just hoping to get to talk to a visitor. Well they just sold a Groupon that will get 50,000 visitors thru their doors in the next year. That is 50,000 people enjoying the Newport Aquarium that might not have otherwise, they will shop at the giftstore and eat in the cafeteria. Not to mention the amazing fact that Groupon sold more than $120,000 worth of coupons for the Aquarium in 2 days. I think its pretty incredible.

On the flip side, some businesses really don't think it thru and end up selling a coupon that costs them heavily. Say for instance a restaurant that sells an $8 coupon, they sell 1,500 of them on Groupon, making them $6000 (which they will get in 3 chunks of $2000 over the course of the year) but now they have to make and sell $24,000 worth of product. That is a lot of product for a restaurant to sell for only $6k. They will lose money on this deal, between their cost of supplies and staff, there is no way around this heavy loss. In fact, I kinda feel guilty buying restaurant Groupons. All I gotta say is if you do, tip heavily and buy a few cocktails when using a restaurant Groupon. For realz. I don't know why a small business-owner restaurateur would possible sell a Groupon. But they seem to get talked into it all the time. What I think is that they just don't realize how many will sell, they don't crunch the numbers, and they don't do their research. Groupon claims the biggest draw back for small businesses like this is not being able to deal with the flood of business they will drive your way. Perhaps businesses don't believe them when they say that.

Okay, before I start rambling on and on, my point is this - the Aquila Glass School is selling a Groupon for a beadmaking class. We crunched the numbers, we learned from our first Groupon (it was for a Fusing class which Don thought might sell a few dozen then 1,300 sold in reality!) and now we are at it with a bead class. If all goes well I will have a thousand or so new students in my classes over the next year. Lots of full classes and more future glass addicted crafters. For the studio it is a good thing.

2 comments:

Von said...

Hi Leah - looking for more groupons for classes. So fun!

BlueStella said...

I've taken both the beadmaking and fused glass class with the Groupons. I have alwasy wanted to take these classes and probably never would have without the Groupons. It was a great way for me to get into the studio and now i plan on going back to create things on my own!