
Groupon shares fall as merchants cut back on deals - FluidDjango
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/05/BUJ61MKQ2A.DTL&type=tech
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leak
Here is my take on the whole Groupon thing. Every small business should give
customers, especially first time customers, a discount. We used to print in
the local news paper "buy 1 get 1 free ciagar" specials and pay the paper $250
for that ad. It wasn't really worth it but we did it every month because our
competitor was doing it.

This is what I see is happening with a lot of small businesses. I don't think
the issue is really Groupon so much as it is the businesses not understanding
what to do with these new customers. If they're just in there for the deal,
they won't come back after they get the deal. This is from first hand
experience.

We got customers coming back because the deal was just to bring them in. That
was all. It wasn't even to find new customers. We just wanted traffic. Once we
got the customers, each of us who worked there had a responsibility to get the
customers excited about coming back. We were masters at it. These small
business lack that skill and it has nothing to do with Groupon or any other
deal advertising platform (including newspapers).

~~~
DanBC
I go to Starbucks _every_ single morning. I buy a cup of coffee, and something
to eat. I tip. I'm polite and friendly; I don't leave a mess and I don't leach
too much wifi.

One morning I get there and there's a long queue. People don't know what
they're doing - they're taking ages looking at the menu and choosing drinks
and trying to order them and arguing over the drinks they're eventually given.
And they all get a pack of beans, ground to how they like. And then I notice
that they're handing in a coupon from a newspaper.

So: I don't get free stuff; I do get worse service; staff get a bunch of rude
people who are only after the free beans. I was grumpy. Staff were grumpy.

~~~
leak
Customers don't care about "free stuff" or even prices. They care about
service. This is my point. GroupOn may help bring in the customers with the
coupons but customers don't go back because of prices (not so much). If the
experience sucks, it sucks and that's it.

~~~
untog
_Customers don't care about "free stuff" or even prices. They care about
service._

I would _love_ to see some data on that, because I have a really hard time
believing it. Otherwise I'd struggle to explain how Walmart has ever been
successful.

~~~
felipemnoa
It really depends on the expectations that the business sets. Customers go to
Walmart for the cheap stuff. Some people may go to Starbucks for the
experience. If you go for the experience and you get bad customer service then
you will never go back.

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ianferrel
"Groupon, in fact, said in a June IPO filing that offering merchants more
favorable terms may cut into its profits."

Does Groupon actually have any profits, or do they really mean "exacerbate its
losses"?

~~~
tsantero
_We increased our revenue from $1.2 million in the second quarter of 2009 to
$430.2 million in the third quarter of 2011. We generated these revenues from
gross billings of $3.3 million for the second quarter of 2009 as compared to
gross billings of $1,157.2 million for the third quarter of 2011. We had net
income of $21,000 for the second quarter of 2009 as compared to a net loss of
$10.6 million for the third quarter of 2011._

Source: Groupon, Inc. Form 424B4 Prospectus
([http://investor.groupon.com/secfiling.cfm?filingID=1047469-1...](http://investor.groupon.com/secfiling.cfm?filingID=1047469-11-9142&CIK=1490281))

Edit: So to answer your question, exacerbate its losses.

~~~
leak
Amazing to me how a company can gross $1.1B and end up at a loss at the end of
that. Almost feels pointless.

~~~
chucknelson
Eh, I'm sure some hefty salaries being paid with the revenues makes employees
happy at least.

I'm sure Groupon will get things under control, but I think the cut in fees
and less frequent participation of merchants will offset any revenue growth.
Just more investing on hype I guess.

~~~
tsantero
>Eh, I'm sure some hefty salaries being paid with the revenues makes employees
happy at least.

 _We grew from 37 employees as of June 30, 2009 to 10,418 employees as of
September 30, 2011._

If not hefty, than numerous...

Why Groupon employs over 10k people is beyond me, even if most of their
employees are in accounts/sales it seems those numbers are a bit excessive. I
have personally worked as a salesman for over 4 years, personally handling
hundreds of clients on 5 different continents. I'm now very curious to know
what its like to work at Groupon.

~~~
gersh
Groupon is in about 250 markets I think. So, that is 40 people per market. If
half are customer support, that would be like 20 people per market in sales.
That would mean the average salesperson, sets up 1 deal/month. Although, they
probably churn through sales-people. So, if half the sales people are totally
incompetent, that might be two deals per salesperson per month. Plus, there is
probably some other stuff with Groupon Now.

~~~
dcpdx
I used to work at a "Groupon for X" startup and I can say that only closing 1
deal per month would be catastrophic results for a salesperson. I can't speak
for Groupon, but I would put their targets at around 10-12 closed deals per
month.

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waterside81
Exactly what we've seen. Our first Groupon was at a 50/50 split, no
exceptions, no wiggle room. Our latest was at 70/30 in our favour.

~~~
gallerytungsten
The "daily deal" space is rapidly being turned into a commodity service. I'd
expect the splits to become even more favorable for merchants. How low can it
go? Probably all the way to 10% or less for Groupon.

~~~
AznHisoka
Yup, and the lower the discount, the less excited the customers. Groupon is
example of there being no free lunch.

Of course you can make customers happy.. anyone can.. just give stuff for free
or 50% off, but how do you create value without giving it away? Groupon has no
answer for that

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darksaga
This is another company which is going to die a slow, painful death. I think
the overall consensus is they're done, but they continue to plod along, losing
money as they go.

They can only continue to churn their losses for so long. At some point, it's
going to go from a slow drain to a quick exit. I'd keep an eye for them buying
their stock back and layoffs.

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linuxhansl
Everybody who bought Groupon shares deserves to loose some money. The writing
was on the wall.

Some financial institutions tried to sell Groupon as a great thing (and they
probably taken their profits and ran).

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rajpaul
did the ipo turn out to be a better payout than google offered them?

~~~
awakeasleep
Thats hard to say, because I don't know what google was really going to buy.
51% of the company for 6 billion? Or were they going to acquire everything?

Right now I believe Groupon's valuation is around 25 billion, but they only
offered something like 10% of their shares for public bidding.

