The reason behind falling Groupon revenue that no one is talking about
Groupon, by design, is a really exciting website to use.
You get a gorgeous tiled display of the latest and hottest deals near you. Best of all are the (apparently) very low prices, bold and green, huge savings against the old crossed-out prices.
Inevitably, scrolling through all of this eye candy, you will eventually find a deal that is perfect for you. And oh-so reasonably priced too.
For me, it was a ladies’ haircut with all sorts of bells and whistles attached.
It was $30. A whopping 80% off from the price of $150.
Calling up the vendors, I was sure to let them know that I was no ordinary customer, having been bestowed with an 80% discount from the Groupon Gods.
“Yeah, you can get the same prices in-store if you pay in cash!”
“It’s really better then if you don’t buy the coupon. You haven’t bought it yet, have you?”
And now, I definitely wouldn’t.
Groupon has a very obvious problem.
You can’t expect businesses to take a hit on their margins and still pay Groupon a cut from every sale.
So people will lie. They will pretend to offer massive discounts — the more extreme, the better.
Now picture that you are the customer. You have found an awesome deal for a haircut. But you can get the same prices in store. Would you go through the hassle of fumbling for your credit card numbers, printing out the coupons, and locking yourself to one salon, restaurant or cleaning service?
Why would you, when you could just pay in cash? Zero hassle. Zero Commitment.
If customers and vendors deal on the same terms with each other, both will prefer to keep Groupon out of the equation, simply because the customer has a more convenient experience, and because vendors don’t have to give Groupon a cut.