weeks - 2:16 pm on Jun 7, 2011 (gmt 0)
weeks,.. You picked an extreme. Software is another thing, Symantec for example can probably sell it's antivirus even for $3 if a billion people buy it but most of the Groupon deals are labor intensive. Someone has to be there and provide the service, massage, do nails, cook or whatever.
rogard pointed out
To underscore how service biz oriented the daily deal sector is, I looked at my morning deal selesction so far:
-a $5 for $10 restaurant deal
Four of these are low variable cost services that, if excess capacity is available, can be offered cheaply. As long as the business operators don't schedule so many deals that they have to turn down full price business, they will boost profits and meet new prospects they can try to convert into long-term customers.
The $10 restaurant coupon is the exception, but the value is low enough to avoid major damage to the restaurant's bottom line and is probably a cheap way to acquire new customers.
There's likely a little benefit from the mailing, too. Each one is a potential branding impression, and the more appropriate the target the more likely they will study the offer and perhaps even click through to the website.
Take nail polishing, for example. If you are just sitting there from 2 to 4 pm with few customers, you still have to pay your overhead. Sooooo, ...
Plus, if Groupon (or the others) can provide some analysis of what is working to the retailers and perhaps a worthwhile db,...
The value of having someone in your shop is difficult to overstate. The ad gets them in, then it is up to retailer to get them to come back.
But, yeah walkman, discounting needs to be done very thoughtfully. Too many people equate value with price, for example.