Why Groupon? | A Professional Review About Selling in Groupon
Last Updated on March 12, 2019 by
A Thorough Discussion About Negative and Positive Aspects of Selling in Groupon
Who’s not loving Groupon? People love discounts, especially during hard times when money is tight. Since its launching, in November 2008, from Merchants to Customers, Groupon is keeping everyone happy.
If anyone runs a small business, they must always compete for new customers. The cost of securing new customers can be high, and they can spend a lot of money on advertising that doesn’t pay off in sales. However, with the advent of Groupon, they can offer a sale item. Their cost of advertising is the discount on the item, which can be much more attractive than advertising rates.
Why do Business in Groupon?
Groupon is a blend of “Group” and “Coupon” word. It can be a great place to advertise your business and find new customers. It creates brand awareness. Groupon gives you the opportunity to promote your business to customers who are unfamiliar with your product or service. The idea is to WOW those new customers so that they come back and buy from you again. It can move slow inventory or sell an underutilized service.
Negative and positive aspects of doing business in Groupon
As many other marketplaces, Groupon has its pros and cons, so, Merchants need to decide if this is something worth their business getting into.
Positive aspects of Groupon
Attracts a lot of new customers
In small businesses, it is important to gain new customers and retain returning customers. If they are in the process of trying to capture the attention of new customers, a promotion through Groupon could be just the way to do so. Customers are always looking to try out new businesses, products, and services, so what better way to entice them to your business than with a discount promotion? Before starting of a Groupon promotion Businesses must have enough product in stock, employees on hand, and resources available to serve the needs of the promotion and the influx of customers flocking to your store.
Effective Advertisement for the business:
Groupons can be a valuable form of advertising. Groupon display your logo, brand name, website, and more, allowing potential customers to learn more about your business before purchasing your discount promotion. Regardless of whether a customer purchases your online discount or not, the online service will have been another ‘touch point’ in your marketing campaign that effectively reached your intended audience. Typically, these promotions will generate a coupon purchase, an increase in website visits, and an overall improvement in in-store traffic and purchases.
Opportunity to build new customer relationships
Groupon provides a golden opportunity to build great customer relationships. Businesses can utilize this golden opportunity to demonstrate superior services, top quality products, and unparalleled customer service and satisfaction rating. Online discount promotions are a great tool for fielding customers to the establishment of a business, but it is their job to keep them coming back.
Best way to move slow Inventory
If a business experiences a slow season, a discount promotion distributed through Groupon can boost customer traffic. Using Groupon deals to sell slow moving items from the inventory can save businesses to make at least their purchase cost and can help to utilize the warehouse space for new items.
Negative aspects of Groupon
Discount deals only attract customers looking for a bargain
Typically customers who take part in Groupon deals have a very low return rate and illicit a dismal spending rate as well. Their only goal is to go into business, use the coupon and receive the product, and leave. So, there are low rates of spending and low rates of return. One problem with price deals is diminishing returns; thus, instead of making potential new customers merchants will lose money.
Sales from Groupon are lack of brand loyalty, awareness and value
According to marketing experts, Groupon has a low conversion rate for repeat customers. Customers taking advantage of Groupon discounts characteristically have no brand affiliation or loyalty to the company or brand offering the deal. In fact, the majority of the time, they will even switch their particular brand affiliation or loyalty based on the price of the discount. It makes customers price sensitive. When they get something at a much lower price, they then become less inclined to pay full price for that same product or service in the future.
Non-profitable deals hurt the Brand and Business
Groupon will take 50% of the revenue earned from their online discount promotion. Between that takeaway and the steep discounts they make the offer to the merchants, there is a good chance that the seller will lose out on a significant amount of money. As a small business, they just aren’t earning enough to cover the cost of serving that customer. On the other hand, Low price damaged the reputation of a brand, once a customer buys a product with a lower price, will never buy the same brand product at a higher price. Thus business may lose its brand value.
Now, After a thorough discussion about positive and negative aspects of Groupon, it’s time to decide whether or not a merchant should do a deal with Groupon. If the business is in a stable financial position to potentially lose a bit of money in order to get more customers through the door and if the business is not dependent on brand loyalty, then Groupon marketplace is the best option to run an online promotion coupon.