02 Oct

NYTimes.com – Deal Sites Have Fading Allure for Merchants

Just a few months ago, daily deal coupons were the new big thing. The biggest dealmaker, Groupon, was preparing to go public at a valuation as high as $30 billion, which would have been a record amount for a start-up less than three years old. Hundreds of copycat coupon sites sprung up in Groupon’s wake, including DoubleTakeDeals, YourBestDeals, DealFind, DoodleDeals, DealOn, DealSwarm and GoDailyDeals. Deal sites were widely praised as a replacement for local advertising.

Now coupon fatigue is setting in. Groupon’s public offering has repeatedly been put off amid stock market turmoil and internal missteps; the company says it is back on track, but some analysts say it may never happen. Dozens of copycats are closing, reformulating or merging, including Local Twist in San Diego, RelishNYC and Crowd Cut in Atlanta. Facebook and Yelp, two powerhouse Internet firms that had big plans for deals, quickly backed off.

Even the biggest Web retailer, Amazon.com, has had trouble gaining traction in oversaturated New York, where it started offering deals with great fanfare a month ago. There are at least 40 active coupon sites for the city, according to LocalDealSites.com.

Shopping coupons have a long history, and they will undoubtedly continue to play a significant role in local merchants’ efforts to attract customers. But what has become apparent is a basic contradiction at the heart of the daily deals industry on the Internet.

The consumers were being told: You will never pay full price again. The merchants were hearing: You are going to get new customers who will stick around and pay full price. Disappointment was inevitable.

Some entrepreneurs are questioning the entire premise of the industry. Jasper Malcolmson, co-founder of the deal site Bloomspot, compares the basic deal offer with lenders’ marketing subprime loans during the housing boom.

via NYTimes.com – Deal Sites Have Fading Allure for Merchants. Oh yeah, right now is starting to look like a bad deal.

10 Sep

paidContent – More Bad News For Groupon: Sales Team Files Class-Action Suit

Earlier this week came reports that the daily-deals site, suddenly unpopular with both users and investors, is considering shelving its long-expected IPO. Now comes more bad news—Groupon’s own employees have filed a class-action suit against the company.

In a filing in Chicago federal court this week, former salesperson Ranita Dailey confirmed she will be lead plaintiff on behalf of Groupon employees who seek to recoup overtime that the company allegedly failed to pay. The suit claims that Groupon violated federal and state labor law, and demands three years of back wages and punitive damages for hundreds of employees.

The lawsuit coincides with a rise in negative comments on sites like Glass Door by people claiming to be Groupon employees. They have posted comments like: “a boiler room”; “Immense pressure to hit unrealistic sales goals” and “Sales staff cries all the time.”

Groupon did not immediately respond to requests for comment on the class-action suit.

via paidContent – More Bad News For Groupon: Sales Team Files Class-Action Suit. Obviously can’t speak to validity of this lawsuit but it wouldn’t shock me. What a cruddy business.

18 Aug

Harvard Business Review – Groupon Doomed by Too Much of a Good Thing

But what is most interesting about its emphasis on the ACSOI metric is that, deep down, Groupon knows what we all know: good investments are profitable investments. It was simply not enough for the firm to report earnings and explain that it was investing for growth. Rather, Groupon felt the need to include a metric of profitability, no matter how contrived, that was actually positive.

via Harvard Business Review – Groupon Doomed by Too Much of a Good Thing. Oh Groupon, I feel like you just need to go back in time when it was cool if you weren’t making money.

15 Jul

Wired – How Online Companies Get You to Share More and Spend More

You’re not stupid, but you can be fooled. For millennia, the best salespeople have known how to exploit the vulnerabilities of the human mind. In the burgeoning field of behavioral economics, we’ve begun to give precise names to the mental weaknesses that make us all susceptible to a well-crafted pitch. Drawing on the insights of psychology, behavioral economists have explained why we buy more stuff at $0.99 than at $1.00 (the “left-digit effect”), why we commit to gym memberships we’ll never use (“optimism bias”), and why we don’t return things we buy as often as we should (“post-purchase rationalization”). The giants of the web, from Amazon to Zynga, use similar tricks to keep us coming to their sites, playing their games, and buying their goods. In fact, that’s how they became giants in the first place. Here’s how they game us—and how, in some cases, we wind up gaming ourselves.

via Wired – How Online Companies Get You to Share More and Spend More. Always neat seeing psychology at play especially with companies that excel at it.

13 Jun

TechCrunch – Groupon Was “The Single Worst Decision I Have Ever Made As A Business Owner”

Since she wrote the post, she’s heard from other businesses who have had similar experiences. “What was the saddest part of it for me was that this had had happened to a lot of businesses but because no one had ever said anything we all just assumed (and myself included) we just assumed we were bad business people. That we just didn’t know what we were doing. If everyone loves Groupon so much, we must be wrong.” She estimates that she lost $10,000 in hard costs. Other businesses she heard from claim far greater losses.

The Groupon experience has soured her on similar forms of marketing. “Our most successful advertising is through Facebook. And that’s free. Even offering deals through Facebook, which is also free.”

via TechCrunch – Groupon Was “The Single Worst Decision I Have Ever Made As A Business Owner”. The more I read about Groupon the more I want this business to just go away.

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