Groupon is an e-commerce site that connects buyers and sellers on a worldwide basis. The site was launched November 2008 and opened its first market for Groupon in Chicago which is the HQ. After Chicago, a couple of other marketplaces were established in Boston, New York City and Toronto.
By the end of 2010, Groupon was available in over 250 cities in North America, Asia, Europe, and South America. And it offers travel, goods, activities and services to over 35 million registered users in more than 28 countries.
With such a great service comes pros and cons that consumers need to be aware of before plunging in to use Groupon. In this case, consumers are both the service providers and the receivers. In order to decide if your business can get in with Groupon, this list of pros and cons can go a long way.
Brings in a Lot of Customers: Through Groupon, businesses can make offers of cheap deals to the general public. With which they tend to reach out to a new sets of consumers. More or less, it’s a way of appealing to potential clients looking for a way to save money. Groupon promotions offer the best benefit for businesses by restricting sales from existing customers.
Create More Awareness: You can use a Groupon promotion to announce your business to people who are unfamiliar with the services you offer. Entice them to make a trial of your products with the sole aim of making them a returning client.
Clear Out Your Store: You can seize the window of using a Groupon promotion to empty your store. Those items that wouldn’t just sell, the items that are idle, untouched or new can be given at a very cheap rate. Or sold under discounts to promote these products or get rid of them.
Expand Customer Relationship: Instead of making one time deals for every item and not have these clients return, you can split one promo in three or four. Keeping them all within the same price range in order to get a client to be familiar with the products and services you offer.
Brings In the Cheap Shoppers: Since the Groupon sales happen every once in a while, some shoppers might refuse to be a worthy investment. They will only surface when there’s an on-going promo so to get these items at cheap rates.
Slow Sales: Some customers wouldn’t want to purchase same item at higher rates since the coupon offers it to them at a cheaper rate. As such after a Groupon promotion, most merchants might still end up with diminishing return for the promoted products.
Brand Appreciation: Daily deals from Groupon will affect the status of the brand. Most customers wouldn’t want to patronize a brand that brings same product at different prices every now and then.
Returning Clients: The idea of gaining returning clients after a sales promo doesn’t really work in black and white as is stated. Some marketing experts have stated that Groupon doesn’t ensure a high conversion rate for repeat customers. Since most of the customers will only be looking out for a coupon before they make a purchase.
Promo Reduces Profit: For every promo, Groupon gets 50% of the sales income. This split mostly will cost the merchants a great loss as product price will be reduced and the stipulated discount price will also be shared in 2.
Other Brand Deals: Even when you think you are giving the best slash price within the coupon promo, other brands in the same market place can still beat you to it.
When you use Groupon for promo offers, you should offer a good deal that will attract customers. That way you get enough time to enlighten them about the flavor for your company’s products and services. When they gather better knowledge, they will willingly buy whatever they want at full price.