While Groupon may be struggling as a company overall losing 43% of it’s share price in 2014 the daily deals website still represents a great opportunity for small businesses to market their offers. That is… so long as you know what you are doing!
Groupon is undeniably a great way to promote to large numbers of people. Regrettably one British e-tailor found how just how popular the daily deals site is with almost disastrous consequences.
Alistair Cochrane runs Unique Gift Hampers a fine foods and gifts retailer based in Scotland. Alistair thought that he could use Groupon to kickstart sales. By offering a huge discount of 70 percent he thought that a Groupon campaign could bring in some extra income to the business.
Typically a retro sweets hamper would retail for around £25 but Unique Gift Hampers put together a special deal where they would sell a sweets hamper similar to these ones for a reduced price of £7.50.
Alistair was shocked when over 1500 buyers grabbed the opportunity to take the highly discounted price. It was way more hampers than the business was able to produce and they were forced to employ extra people to handle the huge surge in business. This actually meant that they ended up losing £1 on every order. Ouch!
An Expensive Mistake
Unique Gift Hampers, who have been operating for 4 years said on their blog that they would honor the Groupon offer despite it being an expensive mistake.
“We have been up all night putting together these Sweet Hampers. We will get them shipped but there might be a small delay.” they groaned. “We won’t be doing such a great offer on Groupon again!!”.
“We usually really enjoy putting together interesting hampers and baskets that make great gifts. But this time it turned into a bit of a slog and we are feeling the pain in our pockets as well as suffering from lack of sleep. Despite this Groupon deal being a bad move every single gift box that we send out of our store will be prepared to the same high standards that we have set at Unique Gift Hampers.”
“It really was a ill planned marketing promotion.” the blog continued. “Everyone is always singing the praised of Groupon but if you are not careful then you can get your fingers burned.”
No Limits To Orders
Groupon have publicly stated that there are no limits to the number of vouchers that can be sold their their deals site.
“We approach each business with a tailored, individual approach based on the prior history of similar deals,” they said.
However it’s clear that in this case something went wrong.
Daily deals sites such as Groupon offer massive leverage to small businesses, but with the leverage comes risk and you’d better know what you are doing or you could end up with a costly bill.
Continue Reading No Comments