Hot Deal: Groupon

JJ: Surely by now you have heard the hype around Groupon?

Readers: Yes, of course, but we would still like to hear your insights on the subject.

Groupon offers crazy deals and discounts that relate to your city and your interests. I mean stupid good priced offers. Here are some of the many offers that I have personally received:

  • 3 hours of house cleaning for $65 total. No initial cleaning fee, No hidden charges.
  • 6 movie tickets for the price of 3.
  • 24 prime steaks for $130 ($5.50 each).
  • Numerous $50 Gap/Target cards for only $25
  • All of these have been very straight forward offers, no hoops to jump through, no rebates to send away for, just instant savings.

    How it works:
    Groupon offers an exceptional new deal each day to it’s members. You have a limited time (1 – 4 hours) to respond and purchase the offer. You then usually have 60 – 90 days to actually complete the service.
    Believe me, there are a large number of awesome deals that you will find on Groupon, and you will wonder why you resisted signing up sooner. There are a few “issues” to be aware of (keep reading), but this shouldn’t discourage you from joining Groupon. As long as you understand the “issues” you will be in great shape.

    Okay, here’s the catch. Groupon contacts local vendors and promises them a large amount of customers if they offer their LOWEST OFFER. This sounds great, and most times it can be. However, Groupon doesn’t always disclose to the vendor that they are allowed to cap the number of offers accepted. After all Groupon is collecting half of the offer price, so they want the largest number of people purchasing the offers. This can often be a downfall for a small business. Take the above example of 3 hours of house cleaning for $65 – Groupon takes half ($32.50) and the cleaning business gets the other half ($32.50). And thanks to Groupon‘s mass customer base they sell 500 customers on this offer. At first this sounds great. “Wow, we sold 500 cleanings and made $16,250 in 1 day” However, as the business starts to fulfill these offers problems become apparent. 500 cleanings at 3 hours each, that’s 1500 hours of cleaning! Assuming they were able to schedule all these clients back to back and clean 9 hours a day, 7 days a week, it would take them 167 DAYS to fulfill everyone’s offer. That $16,250 is not going to support a cleaning business for 1/2 year of work.
    The same thing often happens with photographers, who often take advantage of Groupon‘s services. It brings them in a lot or clients really fast, but they might end up selling 250, 1-hour photo sessions. There is no way they can get to each client in a timely manner, especially with each client’s schedule.

    Still I recommend signing up for Groupon‘s service. You will find multiple deals that make it worth your effort.

    This entry was posted in Hot Deals and tagged . Bookmark the permalink.