Groupon from a Business Owner's Perspective

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Groupon has become the rage. Everyone including my eldest son is busy looking for bargains over the Internet and I will admit our family has taken advantage of some of these great deals. We’ve bought coupons for the local Thai food restaurant, gourmet cupcakes etc. But there’s another side to this trend that needs to be heard! As a small business owner, I have been approached several times to enlist Groupon (plus other similar companies) to help promote sales of my adorable helmet covers ( The problem is I would actually be losing money if I went along with the scheme. Here’s why: Groupon wants to sell a product for at least 50% of the regular retail cost. So instead of paying $40.00 for a Tail Wags helmet cover, it would cost $20.00. On top of that Groupon wants to collect 50% of that price so they’d receive $10.00 and I’d receive $10.00. In other words, I’d be losing money because the cost of my helmet covers is over $10.00. So obviously I’m not going to be promoting my product via their site. The only products that can successfully be sold on Groupon are the ones that have a huge mark-up in the first place. Often these are products produced overseas in China where labour costs are extremely low. Products such as mine that are made exclusively in Canada cost more to produce. I’m certainly not willing to work for 25 cents per hour. Are you? I wish there was an easy way to lower costs but I’m a die-hard “Made in Canada” fan, which is why I proudly display the above logo on all of my work and web site! What’s your perspective on the couponing craze? Would love to hear your point of view!

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  • Thanks Sarah for posting a comment to my Groupon blog post. Loss leaders are great for businesses that sell multiple products because what they lose in one sale, they gain in another. In my business that only sells helmet covers, I can’t afford to lose money on each sale.

    Karyn Climans on
  • I think it is a good place for companies to put their marketing dollars, get their product known to more people and hopefully get future sales from it. I see that you are able to put a max amount sold on wag jag (I don’t groupon) so limit the amount you will ‘lose’ and maybe the marketing will help in the end.

    Sarah Saville on
  • I agree that Groupon/Daily Deals are not suitable for some businesses.

    It is always critical to calculate, compare and plan before running any deal (or make any decisions). With one-time/infrequent purchases like your product, this model is probably somewhat less suitable.

    Whereas some service oriented businesses with high fixed costs suffer from such an under-utilisation of capacity while they wait for business to trickle in that they run out of cash and have to close before they reach the tipping point of customer numbers (even though they provided excellent service).

    Having seen so many business owners make less-than-optimal choices, I am creating a couple of calculators to help businesses to consider various marketing options (coupons or otherwise). Feel free to get in touch if you think they may be useful to anyone you know.

    All the best, Andreaa

    Andrea James on
  • […] a regular bizchickblogs contributor and small business owner living in Canada. Karyn wrote in a blog post about Groupon last week,“As a small business owner, I have been approached several times to enlist Groupon […]

    Is Groupon a Biz Builder or Biz Killer? on
  • I agree with Marina, websites are great for service businesses..

    Sarah on

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