Skip to main content

The End of Groupon Glory Days

I've written about Groupon and similar services a few times in the past. I've generally been supportive of them, but my opinion is starting to change. I don't think these services are going to turn out to be outright failures, as some are predicting, but I do think that from the customers' perspective, the best days may be over.

(from wovox on Flickr)

The reason I say this is because I've noticed that the quality of daily deals has taken a dive lately. A lot of them are for "junk services" that I have absolutely no interest in. It also seems like there's been fewer deals for restaurants, and when there are, the deals themselves tend to be worth less. In the past, a lot of $25 for $50 worth of food deals were coming across the wire every morning. Now, $10 for $20 seems to be the more common denomination, and I'm beginning to understand why.

There's a lot of stories starting to surface like this one, which explains how Groupon used excitement and hype to exploit some businesses. The bottom line is that any business that tried Groupon once and got burned is probably never going to do it again. That means that all those "too good to be true" deals probably were, the businesses ate the loss, and customers won't see those sorts of deep discounts anymore.

But that's not the end of the story. Before, the answer to the question "why do businesses use Groupon" could be answered with a hypothetical: "because if it weren't a good deal for them, they wouldn't have done it." In fact, the truth may be exactly the opposite. Rocky Agrawal writes that running a Groupon is akin to taking out a really high interest loan, so a business might run one not because it's making them money, but because it's the only way to temporarily stave off their inevitable failure.

The Groupon model may very well to continue to work for businesses that sell services, like massage parlors and nail salons and yoga studios; but for businesses that sell goods, like retail stores and restaurants, I think the glory days are past.

Comments

Popular posts from this blog

In Praise of Southwest's 'C' Boarding Group

A few weeks ago I saw a tweet from someone complaining that their Southwest Airlines boarding pass had been assigned A20 (meaning they would be at least one of the first twenty passengers to board the plane). Apparently this person though they should have been assigned a higher number, less their flight experience be considerably spoiled.

Despite the complaints, Southwest has resisted demands to assign seats on its flights, a decision which I personally applaud. I'll admit that I was skeptical when they rolled out the newest boarding procedure, assigning both boarding groups and a line number; but in hindsight it seems like one of the best operational decisions they've ever made. If nothing else, it effectively eliminated the infamous "cattle call" whereby fliers were getting to airports hours in advance and sitting in line on the floor as if they were waiting for the midnight showing of the new Star Wars movie.

When I was an intern at Southwest Airlines last winter, I…

So You Want to be a Southwest Airlines Intern?

My personal website must have pretty decent SEO - because in the past year, I've received about two dozen emails from aspiring Southwest Airlines interns looking to draw on my experience in search of their own dream internship. In the past two weeks alone a few new emails have already started rolling in...

(from flickr user San Diego Shooter)

If you've found your way here, you might be hoping for the silver bullet; a secret tip that will propel you above the competition. Unfortunately, I do not know any inside secrets. I can only share my experience as an internship candidate about two years ago and, rather than responding individually to future emails I anticipate to receive, I hope that potential interns will find the information posted here valuable.

Understand: Southwest Airlines is a very unique company. The corporate culture at Southwest is truly unlike that of nearly every other company. But you probably already knew that, since it now seems mandatory for every management,…

Good Advertising

The blogosphere seems to be one fire over Microsoft's new "Lauren" TV commercial. Frankly, I don't see what the commotion is about.



If the critics are correct, then "Lauren" is actually Lauren De Long, a Screen Actors Guild eligible actress; and apparently, if you look close enough, she never even enters the Apple store.

Even if all of that is true, it doesn't refute the fact that Apple's laptops are significantly more expensive than most PCs. It isn't a lie that Apple doesn't sell any 17-inch laptops for less than a grand. The advertisement doesn't make any reference to the quality of the machines (or contest any of the claims made in Apple's "I'm a PC" commercials) or provide any good reason to buy one other than price.

As far as I can tell, after years of horrible commercials and a series of flops, Microsoft seems to finally have hired an ad agency that put together a decent advertisement. It's not likely to persuad…