4 Reasons Why Your Business Should Not Sell With Groupon Vouchers
As an entrepreneur, you’ve been hearing a lot about selling with deal of the day websites, such as Groupon. You may even be getting phone calls from these businesses encouraging you to sell your product or service at a highly discounted rate. There are many reasons, however, that your business should not sell with groupon.
You’ll try whatever it takes to help your business grow, but before you get sucked into the hype, take your time to think about it carefully. For most businesses, selling with Groupon simply does not make sense. Allow me to explain why:
1. Businesses rarely make money by selling Groupon vouchers
These websites often require that you discount your offering by at least 50%. Groupon then makes its money by taking a 30-60% cut of the amount it collects for the merchant. This means that most merchants end up collecting only 25% of the original price.
Depending on your profit margins, you’re probably just breaking even, if not losing money on every voucher.
2. Groupon vouchers do not build customer loyalty
If you’re considering offering Groupon vouchers because you think they will bring you new customers that will return again in the future, think again! The types of consumers that frequent these sites are bargain shoppers. They’ll simply go with whoever is offering a Groupon next, or wait until you offer another one. Of course, this is assuming you are not simply selling to existing customers!
3. Offering such dramatic discounts dilutes your brand
When these new or existing customers see that you can offer your product or service for over 50% off the original price, they may begin to question its value, and wonder why it doesn’t cost less to begin with.
4. Groupon traffic can put unwanted stress on small businesses
We’ve all heard horror stories about businesses that simply could not handle all of the sudden, short-term traffic brought on by Groupon. Many small businesses are not set up to handle a large influx of customers at once, and consumers leave dissatisfied with the service they receive. Employee moral can also suffer, especially in restaurants, as consumers often tip on discounted prices.
While selling Groupon vouchers may seem like a good idea, be sure to do the math and consider the risks before you take part in this trend. Representatives may try to sell you on offering a voucher as an advertising technique. If you are looking for ways to effectively market your company, consider looking into web tactics, which are far more efficient and cost effective!