Groupon, which has lost 99.4% of its value since its IPO, names a new CEO(techcrunch.com)
techcrunch.com
Groupon, which has lost 99.4% of its value since its IPO, names a new CEO
https://techcrunch.com/2023/03/31/groupon-which-has-lost-99-4-of-its-value-since-its-ipo-names-a-new-ceo-based-in-czech-republic/
134 comments
Price-conscious consumers will absolutely take a good deal but build no brand loyalty. They'll hop from sale to sale. Businesses live and die by customer acquisition costs. You're better off offering deals to customers who've already demonstrated a willingness to pay near-MSRP regularly, and offer deals if they start dropping off, to get them buying again.
Groupon just proved, at a larger scale, what was always present in consumer behavior. Of course it wasn't going to be sustainable just like click-through rates for ads dropped off once people got used to their placement at a particular location in the search results. In this case, Groupon capitalized on small-business owners who had a poor grasp of how consumers work.
Groupon just proved, at a larger scale, what was always present in consumer behavior. Of course it wasn't going to be sustainable just like click-through rates for ads dropped off once people got used to their placement at a particular location in the search results. In this case, Groupon capitalized on small-business owners who had a poor grasp of how consumers work.
Agreed.
Seemed to only make sense for companies who had no variable cost to use Groupon.
Eg airlines to fill last minute remaining seats. Or museums to drive more foot traffic on historic slow days.
Seemed to only make sense for companies who had no variable cost to use Groupon.
Eg airlines to fill last minute remaining seats. Or museums to drive more foot traffic on historic slow days.
Not necessarily. When I worked for what was the largest floral delivery company, we were all miserable when a Groupon or LivingSocial came out. The people that used those never read the T&Cs, and complained incessantly about everything under the sun. The florists hated them, too, for good reasons. It really killed their income.
There are many variants out there, ie what we have here in Switzerland (buyclub, mostly Geneva) has mandatory drink per person, 5$ minimum, and also usually discount is often 40% and not 50%, no cashback. When we use it we always paid quite a bit on top already-paid discount, happily (starters, cakes, drinks, coffee all ads up). Often same places keep reappearing on the offer, so it doesn't seem to be bad deal for them. Deals don't come very frequently, have strict limit on total coupons count (ie 200, 500), how many per user, timeout etc.
Another variant of the concept is ie La fourchette (the fork), where you can get similar deals, but they are either permanent deals or stay around for longer, so if you don't have anything specific in mind you just search what is available around. Similar rules for drinks.
Another variant of the concept is ie La fourchette (the fork), where you can get similar deals, but they are either permanent deals or stay around for longer, so if you don't have anything specific in mind you just search what is available around. Similar rules for drinks.
I don't understand how anybody who knew anything about the business could think that this was sustainable.
Are you talking about Groupon here or the businesses? I'd guess Groupon fully knew what they were doing - they know they have a small window where they need to make a killing. Why do they care after that? Why do they care if they screwed over thousands of small businesses? They'll just move on to the next legal scam.
I suppose it is upto the businesses to not fall for such one sided schemes. Maybe it is peer pressure, if every business around them is doing it, they feel pressured to do it too? Maybe a restaurant owner is good at making food, but not that good at running a business?
I hate companies like Groupon...
Are you talking about Groupon here or the businesses? I'd guess Groupon fully knew what they were doing - they know they have a small window where they need to make a killing. Why do they care after that? Why do they care if they screwed over thousands of small businesses? They'll just move on to the next legal scam.
I suppose it is upto the businesses to not fall for such one sided schemes. Maybe it is peer pressure, if every business around them is doing it, they feel pressured to do it too? Maybe a restaurant owner is good at making food, but not that good at running a business?
I hate companies like Groupon...
They walked away from a 6B acquisition by Google. They did believe the sky was the limit. I was not in the specific meetings but was there for everything around it. There was a sense of optimism no matter how naive it was in hindsight.
I was talking about the people who invested in Groupon. They should care about the sustainability of the business, because otherwise their investment will have no value.
Seems like a classic rug-pull to me. Early investors get out soon after the IPO, while retail investors are still pushing it higher.
So true, and consumers like me could tell businesses hated it and ended up turned off by the entire concept.
In theory, Groupon was just supposed to be a good way to distribute coupons.
If you think coupons are a good business model, then Groupon makes sense as a distribution model.
If you don't, then I'm not sure why you would think Groupon would magically make coupons better.
If you think coupons are a good business model, then Groupon makes sense as a distribution model.
If you don't, then I'm not sure why you would think Groupon would magically make coupons better.
Coupons were just a means of identification; Groupon was supposed to be a way to organize bulk purchases by groups of people who didn't know each other. Investment turned it into a way to trick businesses into thinking that making their main product a loss leader was a wise choice.
Really the social networking version of a buyers' club.
Really the social networking version of a buyers' club.
I think that Groupons salespeople were getting massive concessions from the businesses they signed up, way beyond what a normal coupon or ad campaign might cost them. That's just my speculation based on the magnitude of a lot of the deals I used to see and the anger I heard from some of the businesses I talked to about it.
The market cap dropped from $17.8 billion to $104 million. They also rejected a $6 billion offer from Google (at one moment).
Probably a lot of regret among those who did not cash/sell out, but that is hindsight.
Probably a lot of regret among those who did not cash/sell out, but that is hindsight.
Some of them did just fine:
In January 2011, Groupon raised $950 million in its last pre-IPO fundraising round. Yet by the end of March 2011, the company only had $209 million in cash, as All Things D’s Peter Kafka reported. So where did all the money go?
Turns out that even as Groupon was losing money, the company paid out over $800 million to company insiders, including $300 million to Groupon chairman Lefkofsky. Groupon, which turned down a $6 billion offer from Google, would later go public at a valuation of nearly $13 billion. It is now worth less than $3 billion, a 77% decline.
https://business.time.com/2013/03/01/groupon-fires-ceo-andre...
In January 2011, Groupon raised $950 million in its last pre-IPO fundraising round. Yet by the end of March 2011, the company only had $209 million in cash, as All Things D’s Peter Kafka reported. So where did all the money go?
Turns out that even as Groupon was losing money, the company paid out over $800 million to company insiders, including $300 million to Groupon chairman Lefkofsky. Groupon, which turned down a $6 billion offer from Google, would later go public at a valuation of nearly $13 billion. It is now worth less than $3 billion, a 77% decline.
https://business.time.com/2013/03/01/groupon-fires-ceo-andre...
What’s the game theory of rejecting life-changing, never-work-again money?
Well they turned down a $6B offer and then went public with a $13B valuation. If those with a lot of stock were cashing it out during the high period, they still got life changing money.
It likely depends a lot on how you value your outcomes. If it's mostly about the money, very comfortable complete financial independence (that you don't otherwise have) would be hard for most people to turn down. On the other hand, we'd have significantly fewer large companies built from the ground up if everyone felt that way.
At least two possibilities:
1. You could be beholden to investors who bought in at a higher valuation than the offer.
2. Never-having-to-work-again can only be measured relative to a sustainable lifestyle, so this turns on what kind of lifestyle you want. If you are content to live in a one-bedroom apartment in Topeka you need a lot less money to never-have-to-work-again than if you want a ten acre horse property in the Hamptons and a private jet. To sustain that kind of lifestyle without working takes a hell of a lot of money.
1. You could be beholden to investors who bought in at a higher valuation than the offer.
2. Never-having-to-work-again can only be measured relative to a sustainable lifestyle, so this turns on what kind of lifestyle you want. If you are content to live in a one-bedroom apartment in Topeka you need a lot less money to never-have-to-work-again than if you want a ten acre horse property in the Hamptons and a private jet. To sustain that kind of lifestyle without working takes a hell of a lot of money.
Their market cap at their peak was nearly triple the offer, they probably figured they were rejecting life-changing, never-work-again money for life-changing, empire-building levels of money.
In other words, they didn't see a future where they could fail.
In other words, they didn't see a future where they could fail.
Already rich, bad advice, or really believing in the moral purpose of the mission.
can’t imagine the last one being the case for groupon…
can’t imagine the last one being the case for groupon…
[deleted]
> They also rejected a $6 billion offer from Google (at one moment).
I was at groupon when this happened. My impression was this was more of rumor and wishful thinking.
I was at groupon when this happened. My impression was this was more of rumor and wishful thinking.
I wonder, in an alternate timeline where Groupon took the Google offer… Apart from some different fortunes for founders and early investors, would things be much different today? I can easily imagine Google selling the company off again a few years later, leaving it in a similar position to Chicago’s most infamous Google acquisition/divestiture, Motorola.
I think Google would have just rebranded it as Google Groupon, let it die on the vine, and it would slump into the Google Graveyard.
I don't think there would be any reason to divest it, it has no manufacturing or anything that stands on its own.
I don't think there would be any reason to divest it, it has no manufacturing or anything that stands on its own.
Instead, Google created Google Offers. It then shuttered it a year or so later, refunding every transaction that had gone through it.
I was working for Amazon's bet (AmazonLocal -- https://local.amazon.com/) at the time. It lasted a bit longer, but was also eventually shut down.
I was working for Amazon's bet (AmazonLocal -- https://local.amazon.com/) at the time. It lasted a bit longer, but was also eventually shut down.
>would things be much different today?
I doubt it. What would have been different--because Google?
For an example of another Google property that catered to local businesses, they bought Zagat--and to the disappointment of a lot of foodies--it probably fed into Google restaurant ratings for a while but, at this point, there's not much if anything left.
I doubt it. What would have been different--because Google?
For an example of another Google property that catered to local businesses, they bought Zagat--and to the disappointment of a lot of foodies--it probably fed into Google restaurant ratings for a while but, at this point, there's not much if anything left.
Seemingly everyone but those making the decision knew it was foolish to decline Google's offer: https://www.theatlantic.com/technology/archive/2010/12/was-g...
Fortunately, there have been plenty of other terrible business decisions that eclipse that one including purchasing Twitter for $44 billion.
Fortunately, there have been plenty of other terrible business decisions that eclipse that one including purchasing Twitter for $44 billion.
Most of the companies in the "software eating the world" manifesto are not doing so hot. I guess after eating retail, something else ate Groupon.
https://a16z.com/2011/08/20/why-software-is-eating-the-world...
https://a16z.com/2011/08/20/why-software-is-eating-the-world...
Groupon was insane at launch. I got to do so many fun things at a STEEP discount for what, maybe 1-2 years?
Then companies realized people like me don't return after I soak one time in a flotation chamber or indoor skydive etc...
Then the deals got worse once the fun places stopped participating, and I lost interest as I don't currently have a need for an 8% discount on a museum ticket.
Feels like another great example of VC-subsisized awesomeness that was facing an inevitable death once it became unsustainable.
Then companies realized people like me don't return after I soak one time in a flotation chamber or indoor skydive etc...
Then the deals got worse once the fun places stopped participating, and I lost interest as I don't currently have a need for an 8% discount on a museum ticket.
Feels like another great example of VC-subsisized awesomeness that was facing an inevitable death once it became unsustainable.
I argued endlessly with my spouse not to buy these deals. There was a lot of FOMO at the time and poor purchase decisions being made. She learned her lesson when we couldn't fit a $200+ Lake Michigan boat ride she purchased into our schedule and we had to eat it. I bet that happened to a lot of people and they significantly reduced their Groupon usage.
Groupon was riding a wave and that wave crashed.
Groupon was riding a wave and that wave crashed.
Yeah, I got in on some Dave and Busters groupon deal that seemed good, but I never seemed to find a time to go. I offered it up on a work email list the day or two before it expired if someone could use it that day, and a coworker said he was able to go with his son, so it more or less worked out, but I don't think I've used Groupon since then.
Glad to hear you both made it through unscathed.
Also, keep in mind, Groupon was launched in 2008. So it shouldn't be a surprise that, immediately after a huge recession that heavy discounting for consumer goods would be a good business model.
In this case was also subsidized by the companies offering the deals.
And I guess they had less money to waste than VCs...
The basic thesis, "More and more major businesses and industries are being run on software and delivered as online services" does still seem to be directionally correct. It isn't the full story, atoms still matter, but the big change was that that many non-tech incumbents finally woke-up to the need to improve their technology game.
>many non-tech incumbents finally woke-up to the need to improve their technology game
And when this started to happen, most of the "disruptors" looking to eat the lunch of these established companies instantly lost their moat, or the illusion of a moat.
And when this started to happen, most of the "disruptors" looking to eat the lunch of these established companies instantly lost their moat, or the illusion of a moat.
Groupon was never software or tech or even group buying.
It was crowdfunded small business loans. The owner of a restaurant or service business could decide to take a loan now to increase capital flow in exchange for promising to pay out some multiple of that amount in goods and services over the coming year.
Blows my mind that the investors didn't realize this.
It was crowdfunded small business loans. The owner of a restaurant or service business could decide to take a loan now to increase capital flow in exchange for promising to pay out some multiple of that amount in goods and services over the coming year.
Blows my mind that the investors didn't realize this.
Software is still eating the world, but a large part of it are being done by traditional companies transforming themselves.
Groupon created a consumer class that you didn't want in your business and would only come when there was a Groupon deal. Then they burned through all the local retailers and became a Bargain Bin version of Woot.
I think I’ve heard that in China, there are lots of companies that do some sort of group purchases for large residential buildings. Ie they essentially do a big Costco run for everyone and they get a big discount. I’m surprised Groupon didn’t pivot to do that.
Judging by sibling comments, there's some kind of ambiguity here... I assume when you refer to "a big Costco run for everyone" you are talking about purchasing groceries, household goods etc on behalf of a group of people who already live in a large residential building. Not, as the first sentence might imply, a group of people coming together to buy the building itself?
I think the only way it makes sense to interpret it as them buying the building is if you believe Costco sells large residential buildings.
You can buy the Costco store inside the Costco store and then take it to another Costco store and get a refund...great customer service
I initially thought they meant that the building was converted to somehow function like a warehouse for a grocery store or something, but for the most part couldn't make heads or tails of the second half of the sentence. It took me three or four reads to arrive at the correct meaning.
Oh, yes, sorry my phrasing was ambiguous. Not buying the property but buying household items for the residents. Buying the property would be a significantly larger pivot for Groupon.
GPT-3 has a better reading comprehension...
There's an interesting group purchase model for properties in Turkey. Essentially a 100 people come together and sign an agreement and start paying monthly fees and these fees are used to purchase homes. Each time the property is purchased, the owner is determined randomly from the group. Those who get the home pay more(since they will no longer pay rent), those who are still waiting pay less.
We had similar thing in Poland in the nineties for buying cars, when credit was too expensive for many people to use. It was called "Argentinian system", so it might have Argentinian roots?
Interesting, I guess people re-invented the system all over the world. In Turkey at least, the system is analog of the "gold day" tradition of the housewives who would gather in each others house in rotation and give the host money or gold to finance the purchase of things like fridges etc.
A similar system exists in the south Indian state of Kerala (and apparently across other places in South Asia, but I am only familiar with the Kerala model). It's called a Chit fund [0] and functions just like you describe.
[0] - https://en.wikipedia.org/wiki/Chit_fund
[0] - https://en.wikipedia.org/wiki/Chit_fund
Fun to see similar informal mechanisms popping up around the world with no connection.
Are there any articles about this?
AFAIK "Eminevim" is the original company doing it, here is a link to their FAQ: https://www.eminevim.com/merak-edilenler
In Turkish of course but Google Translate is pretty good these days.
It's promoted as an option for people who don't want to use credit(for religious reasons or simply they can't). It's also analogous to the Turkish tradition of housewives gathering at the homes of each other in rotation and giving money to the current host to finance a larger purchase like fridge or something. Its called "Altın Günü" or "gold day" as traditionally they would collect gold, but these days any currency goes.
In Turkish of course but Google Translate is pretty good these days.
It's promoted as an option for people who don't want to use credit(for religious reasons or simply they can't). It's also analogous to the Turkish tradition of housewives gathering at the homes of each other in rotation and giving money to the current host to finance a larger purchase like fridge or something. Its called "Altın Günü" or "gold day" as traditionally they would collect gold, but these days any currency goes.
You are thinking of drop.com and even Kickstarter to some extent. Those serve hobbyist niches, where the margin of the "good stuff" tends to be very high and it makes sense to drop that through a group order.
I wonder if we have optimized away that margin in our amazon and walmartified supply chains and there is less need for bulk ordering.
I wonder if we have optimized away that margin in our amazon and walmartified supply chains and there is less need for bulk ordering.
I remember using a site like that a while ago, but don’t recall the name. Basically they’d put up offers on the website but only if a certain number of people committed to buy at the price. It was usually electronics and sometimes the discount can be significant (but mostly 10-20% off)
Isn't that a large issue in their housing market at the moment? I believe many developers have run out of money due to the pandemic and their residential building projects have staled out. A lot of everyday people have seemingly lost all of their savings through these schemes.
The large issue is the land where people want to live is already filled, and nobody is allowed to build larger on that land. Houses next to each other can be turned into apartments quickly and easily, but the law won't allow you to do that. In the exurbs houses are on lots large enough for an apartment on their own - and exurbs from the 1970s are not just regular suburbs. Sometimes an investor will buy a house and wait until the others next to it are sold and then turn the 2-6 lots into one apartment. However they are not allowed to do that.
They're spending all their savings on a Costco run?
I wonder how that would work.
Everyone bids on what they would pay and then Groupon goes to negotiate a price?
Then everyone waits?
Everyone bids on what they would pay and then Groupon goes to negotiate a price?
Then everyone waits?
I've participated in something like this for chicken feed. Someone makes a spreadsheet, collects payments, and sets up the order with the vendor; it gets delivered via a regional freight carrier (less than truckload), everybody shows up and picks up their stuff. Rinse and repeat once a quarter. No real bidding process, everything is at a fixed price, but better than retail.
I think 'co-operatives' tend to be set up for just this purpose. Typically to distribute the burden of investing in and maintaining space or capital equipment but I imagine they also organize bulk orders of specialist materials.
Would be interesting to see if anyone could beat traditional retail pricing as far as say Costco items go in the US.
it's called 团购, which is literally (group buying)
they just buy in large quantities and resell at slightly lower price than consumers can get individually
they just buy in large quantities and resell at slightly lower price than consumers can get individually
I've worked with some businesses who heavily used Groupon.
Groupon basically resorted to being a payday loan operator - but for businesses. They would give you some cash up front, but you bit the curb on the backend. So I witnessed at least one business death spiral - constantly going back to Groupon because they needed the money so bad.
Any "promotional value" you got out of being on Groupon has long since been gone. If anything, you suffer the "Groupon effect" - you get the worst, most entitled customer and you have to provide them service while losing money on them.
Groupon basically resorted to being a payday loan operator - but for businesses. They would give you some cash up front, but you bit the curb on the backend. So I witnessed at least one business death spiral - constantly going back to Groupon because they needed the money so bad.
Any "promotional value" you got out of being on Groupon has long since been gone. If anything, you suffer the "Groupon effect" - you get the worst, most entitled customer and you have to provide them service while losing money on them.
Unfortunately Lightbank, the venture fund started by a GroupOn founder, is still around. They are absolutely horrible for founders. I don't know how they got anyone to sign the "we take 50% for 100k" term sheet.
https://news.ycombinator.com/item?id=7342855
https://news.ycombinator.com/item?id=7342855
What's with the jab at the Czech Republic?
>Senkypl will run the company… out of the Czech Republic.
>Senkypl will run the company… out of the Czech Republic.
I don't see it as a jab at the Czech Republic. But I think it is highly unusual for a CEO to be based out of a country that doesn't have any kind of Company HQ or significant base of operations, and which is 7 hours ahead of the TZ of the Company HQ based in Chicago.
I mean, that arrangement might work for some kind of employees, but for a CEO in this case it's a bit odd I guess
I mean, that arrangement might work for some kind of employees, but for a CEO in this case it's a bit odd I guess
They also mention how it was previously run out of Las Vegas, so it could just be to highlight the immense shift in distance.
It could be a way to emphesize remote work.
It could be a way to show that they're stupid for not working out of SF, or it could be away to show that they're smart for not working out of SF.
Really, anything goes here. Up to the reader to decide.
It could be a way to emphesize remote work.
It could be a way to show that they're stupid for not working out of SF, or it could be away to show that they're smart for not working out of SF.
Really, anything goes here. Up to the reader to decide.
Nothing wrong with the Czech Republic per se, but it’s at the far outskirts of the “Western world” and is nowhere near any modern tech hub. Hot tech companies tend to be run from California, Seattle, New York, London, etc., or alternatively Shanghai, Beijing, Tokyo, etc., not from small states in Central Europe far from either pole. Thus the company being run from Czechia is a sign of how far it’s fallen.
This isn’t a “jab” at the Czech Republic at all, which is by any measure a wealthy, developed, and well-run country where people have a high quality of life.
This isn’t a “jab” at the Czech Republic at all, which is by any measure a wealthy, developed, and well-run country where people have a high quality of life.
JetBrains was founded in Prague. I suspect most people on hacker news are familiar with them.
Not entirely true. They used to sit in Saint Petersburg AFAIK, and it used to be all-Russian team at the beginning. The Czech address had been (not sure about now) just a virtual HQ.
I’m not claiming that it’s impossible for a top tech company to be run from Czechia. I’m only claiming that it’s uncommon.
Prague is a small tech hub by capital size, but the tech they're building there is first class
Came here to ask this. The ellipsis is in the headline and repeated in the article. What is it supposed to imply?
Shocker /s. Groupon went from a useful service where I'd actually occasionally get a deal to just another stupid fake coupon site that listed a bunch of stuff that was either outdated/expired/fake or was just an ad for a website. "Get 5% off of everything when you shop at ___"
The last time I bought anything on Groupon, I spent about $200 to buy concert tickets for me and my family. Then the pandemic hit, the event was cancelled, and Groupon doesn't offer cash refunds. I was stuck with $200 in "Groupon Bucks". Do you have any idea how difficult it is to spend $200 on Groupon? The website is full of worthless crap and it took me 3-4 months to find enough things barely worth buying. Two things I can remember purchasing are chopsticks and a feather duster. All else I can remember is escape rooms. So many escape rooms. I haven't given Groupon another penny since.
Needless to say, I'm not the least bit surprised by this headline.
Needless to say, I'm not the least bit surprised by this headline.
Groupon seemed like a great idea at the time, and I used it frequently for deals. What is the business model not working these days?
Groupon was funded by the participating businesses, and the promised growth didn't occur for them.
I personally only ever used it for a discount at businesses (restaurants) I already went to. It was lose-lose for them on my purchases, but at least I still went afterwards.
Many Groupon customers would just use the coupon, and never return. This is a total loss for the business, because the coupon was often below cost for the restaurant. Note that the only things that really remained forever is the things that had nearly no incremental cost for the business to give out (free trial for SaaS-style things).
I personally only ever used it for a discount at businesses (restaurants) I already went to. It was lose-lose for them on my purchases, but at least I still went afterwards.
Many Groupon customers would just use the coupon, and never return. This is a total loss for the business, because the coupon was often below cost for the restaurant. Note that the only things that really remained forever is the things that had nearly no incremental cost for the business to give out (free trial for SaaS-style things).
Not Groupon specifically, the whole concept died off. Here's why I stopped using the genre:
1) Deals are not good. That is, the price reduction is not real or comes with reduced service.
2) Problems with honouring the purchase. The experience is not as purchasing something at reduced price from the shop, you need to go through separate process and the vendors act as if you forced them to sell you the deal. Some try to upsell a bit too hard, degrading the experience if you refuse. Some claim that your coupon is not valid and you need to deal with customer service to resolve issues.
3) Social stigma. It's uncool to take someone somewhere with a coupon, so all the deals for two are not good.
1) Deals are not good. That is, the price reduction is not real or comes with reduced service.
2) Problems with honouring the purchase. The experience is not as purchasing something at reduced price from the shop, you need to go through separate process and the vendors act as if you forced them to sell you the deal. Some try to upsell a bit too hard, degrading the experience if you refuse. Some claim that your coupon is not valid and you need to deal with customer service to resolve issues.
3) Social stigma. It's uncool to take someone somewhere with a coupon, so all the deals for two are not good.
And as others have noted, it also often isn't great for businesses either; it tends to attract price-sensitive customers who are willing to put up with all of the above for some savings and many won't be repeat customers at regular prices.
Definitely. Everyone was greedy, the customer is trying the pinch a penny and the vendor tries to screw the customer since doesn't expect repeated business.
IMHO it could have been like a trail session, have it been framed correctly. Instead, it was structured as race to the bottom from every side.
IMHO it could have been like a trail session, have it been framed correctly. Instead, it was structured as race to the bottom from every side.
Which became a self fulfilling prophecy in my experience: you buy a deal on a personal service like a hair salon, the staff assume you won't be a repeat customer so they give you terrible service which does not inspire you to return.
Everything you guys say rings true to me. It ended up not adding a great amount of value for either businesses or consumers, and without true added value there's no revenue bite for Groupon.
The stigma of using a coupon didn't bother me so much, most restaurant servers were always cool about redeeming them (and of course I always tipped on the pre-Groupon bill.) But I would sometimes get an (unintentional) negative vibe from higher ups, like great another money-losing customer that I'll never see again. That reaction is what discouraged me from using Groupon, if it just ends up generally being a bad proposition for businesses I'd rather just avoid the whole thing.
Oh man, this reminds me I still have a much of credit at Restaurant.com, which I stopped using a few years ago too...
The stigma of using a coupon didn't bother me so much, most restaurant servers were always cool about redeeming them (and of course I always tipped on the pre-Groupon bill.) But I would sometimes get an (unintentional) negative vibe from higher ups, like great another money-losing customer that I'll never see again. That reaction is what discouraged me from using Groupon, if it just ends up generally being a bad proposition for businesses I'd rather just avoid the whole thing.
Oh man, this reminds me I still have a much of credit at Restaurant.com, which I stopped using a few years ago too...
I'm not sure it's so much a "stigma" from using a coupon as an additional step you need to at least make sure the server is aware of. And there are probably circumstances like early dates where coupons may send off vibes you don't want to send off.
But, yeah, online if there's a new customer discount or a periodic 20% off one item discount I'll use it to buy something I would probably have bought anyway. For most in-person things, I don't go out of the way to find/use coupons unless it's a very transactional thing like a museum admission.
But, yeah, online if there's a new customer discount or a periodic 20% off one item discount I'll use it to buy something I would probably have bought anyway. For most in-person things, I don't go out of the way to find/use coupons unless it's a very transactional thing like a museum admission.
Social stigma really? Weeeeeird I feel like it’s almost the opposite, getting a Groupon is a good excuse to go do something with someone. “Hey I’ve got a Groupon for this place, wanna stop by and help me use it up?”
Maybe it depends on the relationship you have. Probably there wouldn't be a stigma when done with close friends.
As someone who worked for a daily deals business not long after Groupons inception, I can tell you that it’s a tough model. It trained customers to wait for deals or targeted the wrong type of customers. In some cases businesses took losses or razor thin margins in the hopes of attracting what they thought would be new recurring business. But the reality was that the customers attended/purchased once and then moved on to the next deal. Businesses were often just giving away product for free. The timing for Groupon was perfect. It was 2008 when businesses were struggling and customers were price sensitive. But ultimately I just don’t think it was a good marketing tool for businesses.
I stopped using them because the vendors always made me feel guilty about it, and occasionally would also skimp on the services on top of the guilt trip. Groupon should have done more to manage that, like taking customer complaints seriously regarding these practices.
Around us, it really quickly stopped being "deals on real things" and "pre-buying cheaply made crap to hit the price point".
For example, most of the restaurant coupons didn't apply to the real menu, and was usually a "special menu" that consisted of whatever cheap crap they could toss together for pennies (always pasta) and the worst bottle of wine they could source. After getting burned a couple times on that we never went back.
The equivalent of a custom-made Black Friday TV model so Best Buy could claim "60 inch LCD TV for $199".
For example, most of the restaurant coupons didn't apply to the real menu, and was usually a "special menu" that consisted of whatever cheap crap they could toss together for pennies (always pasta) and the worst bottle of wine they could source. After getting burned a couple times on that we never went back.
The equivalent of a custom-made Black Friday TV model so Best Buy could claim "60 inch LCD TV for $199".
Eh it never really made sense as a business. The concept was discounts to get new customers. But that's not really a sustainable business. Either it works and the business gets the customers they needed or it doesn't. The first is a problem because there's only so many local businesses and the second is obviously bad. The net result is that they burned through their suppliers and the deals went from steep loss leader discounts to "discounts" that really aren't discounts.
I mean... maybe it was not that bad an idea, but did it really seem like a 17 billion idea to you?
yes because i still have no idea where to get my car detailed in a seamless way. I can search on google, read reviews, call and make an appointment. But thats not what i want to do.
Groupon sold itself as OS for local commerce. I see that as a 17 billion idea.
Groupon sold itself as OS for local commerce. I see that as a 17 billion idea.
Groupon. Man, that's a blast from the past.
what are they up to these days?
what are they up to these days?
I remember downloading it like 10 years ago and I got notifications for just random things like a dog day spa, 2 hours away or some 6 am zumba class on the other side of town.
It was basically that giant coupon book you get in the mail that you just throw away
It was basically that giant coupon book you get in the mail that you just throw away
Hey, don't dismiss the mail coupon books. They're great. My family uses them for meal planning and we save about 50% on our food budget.
Wow, we need to do this. After mortgage, food is our largest expense ($2k/month, yikes.)
The "local fundraiser books" that you get for like $20 are also great; you can usually make that back with two or three coupons. The one near me had 4 $5 off coupons for the local grocery store and so a great deal.
yeah they're great if you're a conventional eater. I'm one of those kooks that try to go vegan and all natural. It's a barren desert for me.
Maybe I should try again, it's been a couple of years.
Maybe I should try again, it's been a couple of years.
I took a look at their website now and realized I really don't want to know...
They're a great resource for laser hair treatments lol
Let me provide some context - in the Czech Republic the local alternative Slevomat is hugely successful and the businesses do like using it, because it actually does bring them repeating customers.
Slevomat is actually larger by capitalization than Groupon.
Slevomat is actually larger by capitalization than Groupon.
What does Slevomat do differently, to generate repeat customers?
It doesn't offer discounts, it sells experiences. It's like a special promo, maybe with a little discount, but more importantly there's something special about it - something bundled, a gift, a theme, a story, maybe you meet someone unusual who teaches you or shows you something, or it's regarded as high-class...
The goal is not to get repeat customers going to your shop, but to sell more on Slevomat. People use the vouchers as gifts for their close friends and family. If they liked the experience, they will reuse the idea as their own gifts.
The goal is not to get repeat customers going to your shop, but to sell more on Slevomat. People use the vouchers as gifts for their close friends and family. If they liked the experience, they will reuse the idea as their own gifts.
Wow, Groupon, that's not a name I've heard in a while.
The article touches on this, but this was just a fad from day 1. Companies realized pretty quickly it was nearly universally a horrible deal for them: sell your products at just 25% their normal price (usually 50% off and Groupon took half of the rest), usually from small businesses with teeny margins anyway, only to find out this hardly ever resulted in repeat business where customers were subsequently willing to pay full price.
The article touches on this, but this was just a fad from day 1. Companies realized pretty quickly it was nearly universally a horrible deal for them: sell your products at just 25% their normal price (usually 50% off and Groupon took half of the rest), usually from small businesses with teeny margins anyway, only to find out this hardly ever resulted in repeat business where customers were subsequently willing to pay full price.
I was a developer at Groupon in that early era and remember IPO day. I am literally wearing the IPO shirt as a pajama top right now and stumbled on this. It was such an interesting and exciting place to be at the time. I still miss those days when the Chicago developer scene was so active and fun.
Looks like Google dodged a bullet in acquiring them all those years ago
I think they will turn the company around. I follow the new CEO's investment partner on Twitter, they bought a big chunk of Groupon last year. One of the smartest people I follow.
The fact that at some point was almost a $20B company ($30B today) is pretty wild, that's like HP, Spotify or KIA.
They need to pivot or find niche verticals and they needed to do that 7-8yrs ago. Didn’t realize they are still around
They should do a Groupon for their stock. Buy one get one free?
Hopefully, the new CEO can help them reach the 100% mark.
The Groupon business model reminds me of timeshares (covered well by John Oliver recently). You supposedly get a good deal on something you can use in the future, and then it is made as difficult as possible, in my experience, to actually use it.
Groupon initially was great.
Then it was great, except only for regular-priced options and not available on weekends or holidays.
Then people realized that, instead of getting a Groupon for a new cafe or restaurant or kickboxing studio and then becoming a repeat customer, they could just keep getting Groupons for a new cafe or restaurant or kickboxing studio every week and never have to pay full price for it again.
Then actual regular customers got fed up with the businesses getting a huge influx of entitled assholes who didn't care about the place or the people, who all rushed in on the last possible day and demanded that they all get their booking that they waited 8 months to redeem.
I loved it at first and tried out a lot of new places that I continued to visit, and some that I didn't, but after the honeymoon period it was just an absolute disaster for everyone - the businesses, the existing regulars, and the people who realized that they paid money for something they won't have time to use.
Then it was great, except only for regular-priced options and not available on weekends or holidays.
Then people realized that, instead of getting a Groupon for a new cafe or restaurant or kickboxing studio and then becoming a repeat customer, they could just keep getting Groupons for a new cafe or restaurant or kickboxing studio every week and never have to pay full price for it again.
Then actual regular customers got fed up with the businesses getting a huge influx of entitled assholes who didn't care about the place or the people, who all rushed in on the last possible day and demanded that they all get their booking that they waited 8 months to redeem.
I loved it at first and tried out a lot of new places that I continued to visit, and some that I didn't, but after the honeymoon period it was just an absolute disaster for everyone - the businesses, the existing regulars, and the people who realized that they paid money for something they won't have time to use.
'Then actual regular customers got fed up with the businesses getting a huge influx of entitled assholes...'
I've heard it said many times that the worst customers are the ones who've paid the least.
I've heard it said many times that the worst customers are the ones who've paid the least.
And you have to remember you have the coupon and make the effort to actually use it.
I suspect there are a number of Internet businesses--this, eBay (in its initial flea market incarnation), Kickstarter, etc.--that in their heyday were something sort of novel and trendy. But, over time, a lot of people probably discovered they were buying things they didn't really need and it was no longer fun as sort of a game.
I suspect there are a number of Internet businesses--this, eBay (in its initial flea market incarnation), Kickstarter, etc.--that in their heyday were something sort of novel and trendy. But, over time, a lot of people probably discovered they were buying things they didn't really need and it was no longer fun as sort of a game.
I never had a time share but I thought you owned a condo for say the first half of April. How do they make it difficult to use that?
There are different versions.
Some like you said, are basically an reservation to for accomodations for a specific time period every year at a specific place.
But there are others that are basically "You have 4 nights a year at accommodation options X, Y, X". So you aren't guaranteed any specific locations or days ahead of time.
Some like you said, are basically an reservation to for accomodations for a specific time period every year at a specific place.
But there are others that are basically "You have 4 nights a year at accommodation options X, Y, X". So you aren't guaranteed any specific locations or days ahead of time.
This.
What GP said is true if it's a single place. Those are typically bad because similar accommodations tend to be cheaper, the timeshare tends to depreciate, and the market isn't very liquid.
The ones that offer you nights per year are hard to redeem because they intend to sell to capacity. If it's a single unit, they want to sell all 52 weeks out of the year. You're typically competing with all the rest of the buyers to get a "good" week like Christmas or Thanksgiving. That can also tend towards being a bad deal if you're paying something like the price averaged over a year but you can only get in during the off-season when it's too cold/hot/rainy/etc.
What GP said is true if it's a single place. Those are typically bad because similar accommodations tend to be cheaper, the timeshare tends to depreciate, and the market isn't very liquid.
The ones that offer you nights per year are hard to redeem because they intend to sell to capacity. If it's a single unit, they want to sell all 52 weeks out of the year. You're typically competing with all the rest of the buyers to get a "good" week like Christmas or Thanksgiving. That can also tend towards being a bad deal if you're paying something like the price averaged over a year but you can only get in during the off-season when it's too cold/hot/rainy/etc.
You could say they have left the bargaining stage
A restaurant owner I worked with agreed to run a Groupon. They offered a 40€ dinner for two at a 50% discount for 20€. That was already a fantastic deal. But Groupon took 50%, so the restaurant owner got only 10€ per sale. They sold a lot of them.
The Groupon sales person promised them that this would be great advertising, that people would bring their friends, and that they could sell fancy drinks and cocktails to the guests, so they would make a lot of money.
So over the next 6 months or so, every day a few people would show up, redeem their Groupon to get their 40€ meal, order no drinks, and never come back again.
It was a really shitty deal for the restaurant, but it was a fantastic deal for groupon -- they got a 50% cut for selling a ridiculously cheap meal.
Of course, no business owner in their right mind would ever agree to such a crappy deal a second time. So the success of Groupon was based on finding new, unsuspecting businesses who could be talked into offering such a sweet deal.
In the beginning, with all the hype, that was an easy task. So they saw huge growth at the beginning. But it wasn't sustainable growth. Groupon was exploiting hapless business owners that haven't yet been burned by sleazy marketers.
As soon as the too-good-to-be-true deals became less frequent, Groupons customers also started leaving.
I don't understand how anybody who knew anything about the business could think that this was sustainable.