

Groupon overwhelms San Francisco bakery - ilamont
http://missionlocal.org/2010/05/collective-buying-by-groupon-and-others-brings-customers-and-complications/

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djb_hackernews
I did some math a while ago. They have 50 cities, so 50 deals a day. It looks
like the average deal is $20 and the average participation is 1000 signups per
deal. So that’s 1Mil in cash flow per day. They keep half (sourced from a
friend who did a groupon for her store) so 500K per day revenue. Or about
175M/yr. Which, accounting for my crappy math, accounts for the 1.x billion
valuations I see.

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jules
Half?! That is huge, I don't understand how that could be a good deal for the
people using Groupon, and a very good opportunity for a competitor.

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djb_hackernews
It's not a good deal in the short term. I imagine the sales pitch to
frequently mention repeat customers, brand awareness, and attention. Then I
bet they tell them to take whatever it would cost to break even, and double
it, that will be the groupon price.

As the article mentions, Groupon has plenty of competitors, with probably room
for more.

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minouye
The problem with the sales pitch is I don't know how much insight Groupon has
into the long-term lift they'll give customers (i.e. how much historical data
do they have?). Groupon's pricing seems like it would have to be a stab in the
dark--they can't possibly know the nuances of all the businesses they deal
with (massage purchasing behavior will differ from helicopter ride purchases).
I feel bad for Mom and Pop operations because a massive increase in sales
without proper planning could materially hurt their business.

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woodrow
Another Groupon experience -- Groupon overwhelms Boston helicopter training
school: [http://blogs.law.harvard.edu/philg/2010/03/19/groupon-
market...](http://blogs.law.harvard.edu/philg/2010/03/19/groupon-marketing-
results/)

EDIT: I should add that this is a blog post written by someone heavily
involved in their operations, so there's a reasonable amount of detail.

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jsiarto
I live in Chicago and have been using Groupon for a while. The last one I
bought was 50% off a 1-hour massage and they were booked for 2 months before I
could get in to see anyone. Groupon is hugely popular here (obviously)

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pchristensen
See also Phil Greenspun's experience:
[http://blogs.law.harvard.edu/philg/2010/03/19/groupon-
market...](http://blogs.law.harvard.edu/philg/2010/03/19/groupon-marketing-
results/)

"Starting just after 6 am, Groupon sent out emails to its roughly 200,000
Boston subscribers. I knew that there might be a problem when I checked a few
minutes after receiving my email (I am a subscriber). They'd already sold 30.
By 11:00 am, they'd sold more than 2000. We finally had to beg them to shut it
down at 2600 (we could have set a limit initially but didn’t think to)."

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steveplace
I've wanted to start a business that does this but with nightclubs and SMS.
Good vertical and clear exit (sell to groupon, of course!) Anyone game?

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jos3ph
Great idea.

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jos3ph
You'll need a lot of cash for Facebook ads, Google (& other) content network
ads, and "retargeting" ads like Fetchback. That's how Groupon has acquired
many of their customers.

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Jun8
A lot of businesses would like to have the problem this bakery is facing :-) I
don't think Groupon has an upper limit of customers, they should add this
feature.

Also, I'm wondering if they offer analytics advice (for a small fee, of
course) to their biz customers, e.g. for this type of deal in this location,
you are expecting to get on the average N customers.

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djb_hackernews
Any business could have the problem this bakery is facing, all they have to do
is deeply discount their product and hope they have enough capital to ride it
out.

It's not sustainable.

~~~
Jun8
The hefty fee that Groupon can extoll from their users shows that it's not
_that_ easy in practice.

