Like many, I've been quite intrigued by the "deal-of-the-day" websites that seem to have sprung up almost overnight (they haven't, really, but it seems that way). Perhaps none of these services represent the category better than Groupon, the fastest-growing website of all time.
"A savior for small businesses, Groupon is the most exciting thing to happen to retail since eBay," gushed Fast Company magazine before placing Groupon fifth on its list of the world's 50 most innovative companies.
It depends, I guess, on how you define "exciting."
True, consumers are getting good deals and sellers are enjoying more sales. So, what's the problem?
The problem is that business isn't about just making sales. It's about making profits.
Here's an example...
I recently bought a car-detailing package. Regularly $220, it was selling for just $59. "Get rid of the salt that built up over the winter," the ad screamed. "And we'll come to you!"
I jumped all over it. So did 399 other people before they put the brakes on sales.
Two phone calls, three emails and some back-and-forth with the website support team and I finally secured an appointment--four weeks from now.
Think about what this guy is now up against. Let's assume he does three cars a day-remember, he has to travel to each car's location. That's six months before he gets to all those cars!
And for what? $180 a day, a good percentage of which goes to the website promoter? And what about his regular customers, the ones who paid a regular price and who used to help him turn a profit? They've probably already gone to his competitors.
Understandably, the business owner probably assumed that at the very least, these newcomers would learn about his business and come back time and again.
Well, no.
Because, it turns out, the people who buy deals are--if you can believe it--deal seekers. Offer something at the regular profit-making price and they are nowhere to be seen.
So, I'm not happy, the company's regular customers are not happy and the guy running the company won't be happy once he realizes he won't be making any money or securing any long-term clients.
So, what's the solution? Could the website owners better prepare their customers for the onslaught? I'm sure they could. Would that solve the problem? I'm not so sure.
I guess the real question is, is the deal of the day a good deal for anyone?
Well, I guess the website owners are doing all right.