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Groupon stumbles, do we no longer enjoy an offer?

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Groupon recently announced its first set of results since going public, and the market reacted badly. Yes, revenue tripled, but where a modest profit had been expected, came a $37m loss. Is the consumer no longer attracted by a discount? Have we fallen out of love with daily offers?

We the public love a deal and Groupon did seem to capitalise on this at just the right time, leading to it becoming the fastest growing company in the world at one stage. So where is it going wrong?

We can only speculate at the cause of the problem, but it has not gone unnoticed that Groupon has attracted a fair few high profile complaints, from both retailers and consumers, including horror stories of small retailers being put out of business through honouring offers promoted through Groupon. You may wonder what they were thinking, giving such enormous discounts that they lost money on every sale, but most small business owners are not marketing experts, and were very much won over by the spiel of Groupon.

All major retailers offer loss-leaders, they are an effective method of getting people into your store to buy other things. This works well for a supermarket, but for the small independent, with a small range of products and services, simply ends up attracting the bottom-fishers who will take the discount and disappear. Worse than that, as a retailer you also pay Groupon for the privilege of losing money! A ‘smash and grab’ business model which runs the risk of putting your customers out of business does not sound like a good one to me.

So is the era of the offer dead? Certainly not! It’s human nature to love a bargain, and that is not going to change, but as small retailers realise that paying a third party to give your stuff away is not a route to gaining lots of new customers, the era of enormous discounts must surely be coming to an end, and as this happens, retailers will look to new methods to help generate new business.

We have found mobile to be the new route to attract new customers, cross-sell and increase repeat business. By marketing with a mobile business solution such as tellmeTXT, combined with sensible offers which will not break the bank is helping small business grow, build a database of contacts, and tempt people to buy with genuine and sustainable offers.

Groupon may have left a bad taste in many a retailers mouth, but offers and discounts, when managed sensibly will always deliver success in increased sales and new customers for the savvy retailer.

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