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Getting on Groupon: 5 Things You Need to Know
Groupon, the wildly popular local coupon site, can be great exposure for entrepreneurs. How to get your company featured -- and how to profit from it.
Posted 6/ 28 10 at 10:00 PM | 5 Things You Need to Know, Technology, Money, Advertising & Marketing, Sales, Online Business, Consumer Products & Services, Food & Beverage, Health, Retail, Inventions & Innovations
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In case you're among those who haven't heard of Groupon, here's a quick primer. Groupon, a Chicago-based "deal of the day" website founded by Andrew Mason, is a combination of the words "group" and "coupon." Every day, in cities around the world, the site sends out one coupon to subscribers in each market it serves. A coupon with a significant discount and a caveat attached -- if enough people sign up and agree to use the coupon, the deal will go through. If there aren't many takers, the deal falls through. After all, some businesses are only willing to slash 50 percent off their prices if they know they'll make a profit through volume.As it turns out, 98 percent of the time the deal does go through, and a lot of businesses have been boosting their bottom lines by using Groupon. The large uptick in income has been a draw, and Groupon has managed to help a lot of local businesses gain exposure to new consumers -- beyond the one day they are featured.
Intrigued about becoming a part of this latest e-commerce phenomenon? Here are five things you need to know.
1
Make contact.
Obviously, to get on Groupon, you have to contact them -- if they don't contact you first. That part is easy. You can do it through the company's website and fill out the contact form here. Or call them at 877-788-7858, ext. 2. And you can learn more about how Groupon works at GrouponWorks.com.
2
Manage expectations.
Just because you want to be featured on Groupon doesn't mean you will. If you manufacture shoes or dog biscuits, and they're sold in stores across the country, good for you -- but Groupon can't help you out. If you sell insurance or you're a realtor, you may be a local business, but that isn't what Groupon is about, either. If you're a spa or a restaurant, now we're talking, but even you may have a tough time getting featured right away. "Variety is very important to us," Mason explains. "We don't want to be a business that runs spa deal after spa deal, even though they sell very well. We're not a spa site, we're not a restaurant. We're a city guide. We help people discover all kinds of places that they didn't know existed in their own city."
3
This is a partnership.
For every dollar a customer pays, Groupon takes a significant cut -- around 50 percent. "We say 'about half' because it really does vary, depending upon the size of the market and how much we expect to sell," says Julie Anne Mossler, consumer marketing manager at Groupon. "It can be slightly more or less than 50 percent."
Of course, you might understandably think, "I'm slashing my prices to half, and then I'm giving half of those profits to this company. What's in it for me?"
A big part of the reason that many entrepreneurs find Groupon worthwhile is that sometimes people will bring in their coupons and then end up spending additional dollars. For instance, if your restaurant offers a deep discount, you may not make much on the meal, but you may profit off of drinks at the bar. Or, if you have a garden shop, people may take you up on the great deal and get a lot of plants for a pittance, and then feel rich enough that they buy more flowers, trees or shrubbery. And no matter what, you're at least getting a description of your business in front of a ton of local potential customers, who may end up using your business down the road.
4
The check is in the mail -- really.
The day you're featured on Groupon, the money paid goes directly to Groupon. How do you get paid? They'll cut you a check. "Three installments within 60 days," Mossler says.
Ryan Colarossi, co-owner of The Egg & I, a Dallas-based restaurant and part of a regional franchise, confirms that he received three payments when he did a "buy $10 worth of food, get $20 worth" deal. "The first was immediate, the second a month later, the third, two months later."
Ryan Colarossi, co-owner of The Egg & I, a Dallas-based restaurant and part of a regional franchise, confirms that he received three payments when he did a "buy $10 worth of food, get $20 worth" deal. "The first was immediate, the second a month later, the third, two months later."
5
Like a Boy Scout, be prepared.
Bloomberg recently suggested that Groupon may be a little too successful, noting that a coffee shop that expected to sell a few hundred discounted gift cards for in-store pickup was instead overwhelmed with more than 2,000 customers. So if you're going to take on Groupon, prepare. On the other hand, as Mossler stresses, "Businesses can set a cap prior to their deal going live, to ensure the volume of customers is a number they can handle. Our reps also keep an eye on sales the day of the feature. We always call the business to check in and see how they're handling the volume. Merchants can put a cap in place even after the deal goes live if it sells more than anticipated."
The Egg & I sold 400 Groupons in three hours. "The counter was moving so rapidly that I thought it was broken," says Colarossi, who co-owns the restaurant with his mother, Rose.
Rose summarizes the Groupon advantage in two words: "Excellent exposure."
Geoff Williams is a regular contributor to AOL Small Business. He is also the co-author of the book Living Well with Bad Credit.
The Egg & I sold 400 Groupons in three hours. "The counter was moving so rapidly that I thought it was broken," says Colarossi, who co-owns the restaurant with his mother, Rose.
Rose summarizes the Groupon advantage in two words: "Excellent exposure."
Geoff Williams is a regular contributor to AOL Small Business. He is also the co-author of the book Living Well with Bad Credit.
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Comments (Page 1 of 1)
How can it be excellent exposure when the majority of customers have never heard of this company. There still are a lot of people that don't know this copany and what it does. They need to get their name and the way they do business out there ,the internet can't do it all.
Wow!! Sounds like a GREAT WAY to test market a new product, or quickly flush one's excessive inventory, to turn one's money over into new inventory!!...either way, it's a WIN WIN for the business owner and his newly captured clients/customers/consumers..:-) And then you can right it off as promotional losses, on your taxes, assigned to marketing expenses..:-)..OR YOUR CPA can decide to do that for ya!!...with HIS SIGNATURE applied to YOUR TAX form...:-) \o/ \o/ \o/
Nancy; not true! Groupon is great. I've even turned on friends who live in other places. They LOVE it!
I have used 3 groupons already -- Wonderful deals. Best one was pay $10 and get $25 worth of merchandise at 10,000 Villages. This is no scam and you get your money's worth and a whole lot more. I check it every day so I don't miss out. Sent it to a friend who was looking for rafting on the Ocoee river - she bought it.
From the customer side: AWESOME!!! I love the Groupons in Phoenix. And the article doesn't mention that you can get groupon credit for referring friends. Use this link: http://www.groupon.com/r/uu1232934
to join and purchase a groupon and I get $10. That is so cool!
I have been sent emails to join but thght it sounded fishy. Now I;ll have to go back and probably join.
Groupon is GREAT! We were on Groupon and it brought alot of new clients to the salon. The company was great..they did everythin for you practically. They even sent all the checks on time. I highly recommend getting on groupon if you can.
www.shampologysalon.com
I am a photographer who just ran a Groupon offer. I featured a session including prints for $49. My worst case scenario (if customers only took free prints) would be breaking even. But, I know from other promotions I've run (not even close to being as successful as this) that customers always order more prints so I knew I would profit from each one. I ended up selling almost 200! I have all the bookings I need now for the next year - all from one Groupon on one day. It's totally free advertising if you price it to cover whatever cost you will incur.
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