Do You Say Yea or Nay to Using Groupon for Your Small Business?

With so much hype about deal-generating sites such as Groupon and LivingSocial, we decided to ask our blog readers their opinions on using Groupon for their businesses.

Rainer Takahashi, founder of GroupBuyUnited.com, delivered a carefully crafted response to us that we would like to share with our blog readers.

Below is Rainer’s guest post on using Groupon for business:

Some reasons people have given for using Groupon (and other Group Buy sites):

• More effective than traditional advertising.
• Cash up front with anywhere from a 10% to 30% voucher that goes unredeemed (free money!).
• A great alterative for cash-strapped businesses (especially start-ups).
• Localized, targeted reach.
• The social media marketing potential.

Positive feedback received on Groupon (and other Group Buy sites) in general:

• For service businesses (restaurants, spas, etc.), it is great for employees. The business may be taking a small hit on revenues, but the increase in customer volume means busier employees and more tip money.
• A great way to reduce the financial risk to potential customers of trying a new business.
• Seamless process from start to finish.

Negative feedback received on Groupon (and other Group Buy sites) in general:

• Stories of vendors not knowing their deal went live until after it is posted.
• Since Groupon does not cap the amount of vouchers that it sells for each deal, there are numerous accounts of vendors not being able to meet the demand created from doing the deal, causing numerous headaches.
• Lack of clarity on whether expiry dates on vouchers are legal in all states and provinces.
• What started as a deal-a-day website is now a cluster-of-deals-a-day, reducing the value for vendors since they are now competing for attention on the web page.
• Customer service is hard to reach when requesting help or a refund.

Personal view on Groupon:

Sites like Groupon and LivingSocial are definitely here to stay, but it seems that their growth will force them to change their strategies from localized vendors to larger national vendors. The main cause of this is that most SME vendors have a low cap or maximum amount of voucher they can accept, which means a cap in revenues for Groupon, as well. My prediction is that Groupon will continue to gain and keep the large vendor market, while losing market share in the localized SME market to clone group buying sites.

Rainer Takahashi
Group Buy United Inc.
Website: www.groupbuyunited.com
Blog: https://raintakahashi.tumblr.com/
Twitter: @raintakahash

Have you ever used Groupon for your business? If so, we’d love to hear your story. Leave a comment on this post, and we’ll be in touch with you via email to get more information on your story.

If you like this post, you might also like:

1. Groupon Advice for Retailers: What Does It Really Cost You to Utilize Groupon?
2. How to Launch a Small Business with a Small Amount of Funds
3. What Does The Future Hold In Store For Daily Deals Websites?