Groupon, WagJag and other group buying websites are great for the consumer. Are they such a good deal for businesses? Here's a case study on a burger chain by WagJag.
The fellow from WagJag pointed out that 96% of purchasers purchased MULTIPLE vouchers. In other words, 50% off was a great deal, so they purchased more than one 50% off voucher. Great for the consumer.
If you're the merchant and you sold 14,000 vouchers at 50% off, you've done pretty well in getting your brand out there. But at what cost?
There was a widely circulated blog entry by a cafe owner who lost $8000 on her Groupon promotion. (Note: blog entry is no longer available.)
Let me say that again - she LOST $8000 ON HER GROUPON PROMOTION.
I'm not saying that you need to avoid these services. What I'm saying is you really need to consider the overall outcome to your business. In other words, if you run a group buying promotion and you lose money in the short term, is it likely to be beneficial for you in the long term?
(Nov. 2013 Edit - removed broken link to external site.)
All I'm saying is that from a consumer's perspective, group buying is great. From a retailer's / service provider's viewpoint, it might be different. Group buying is changing how people perceive value, and I think in the long term everyone will expect a discount for everything. That's not good for anyone.