Daily deals gone wrong

Cupcakes102,000

Over the past year or so I’ve been a fairly vociferous critic of Chicago-based Groupon.  Not that they needed any additional scrutiny given the plentiful bad press the daily deals darling has received for their “creative” accounting, high customer acquisition costs, pre-IPO swagger, post-IPO shrinking stock price, and the questionable benefit they ultimately bring to their business customers.  A few weeks ago an interesting piece crossed the news wire and was picked up by a number of media outlets about a small bakery in the United Kingdom that offered a 75% discount on 12 cupcakes which normally cost $40.  Over 8,500 people signed up for the Groupon which only cost $10 and the poor baker was forced to hire extra workers, eventually losing nearly $20,000 on 102,000 cupcakes she needed to make.

Need a Cake Bakery

Now I’m sure that Groupon will be quick to point out that the business providing the offer can set limits on the number deals sold or that perhaps such a steep discount should have been avoided.  That said given the amount of small businesses who have complained about having been burned by offering a Groupon, it might be in their best interest to more proactively advise their business customers about the possible implications of offering too aggressive a deal.

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