Groupon Kills Small Business

KILLING SMALL BUSINESSESSINCE 2008

HOW GROUPON WORKS FOR CONSUMERS

HOW GROUPON WORKS FOR SMALL BUSINESSES

Two Case Studies

Eric Hegwer Photography

Consumer’s DealRetail Price: $250

Groupon Price: $70Savings: $180 (72% off)

Eric Hegwer Photography

Eric’s DealRevenue Split: 60/40 Groupon’s Share: $42

Eric’s Share: $28 (11% of retail)

THE STORY MOST DON’T SEE

Financial Results

• Total Retail Value: $35,000• Actual Deal Revenue: $9,800• Groupon’s Cut: $5,880• Eric’s Revenue: $3,920– $1307 in 5 days– $1307 in 30 days– $1306 in 60 days

Business Results

• Photographer’s Commitment: 210-280 hours– 140 1 hour photo sessions, plus minor retouching,

plus CD creation• Scheduling Nightmare– Engagement photos need to be timely

Effective Wage:$14-18/hr

“My fiancé and I purchased a groupon for engagement photos with Eric…Promises were made …but Eric failed to call…my wedding photography istoo important to take a chance that the photographer might fail to show up.”

Reputation Results

“I would not recommend Eric…I had the misfortune of hearing about him through Groupon…Thank goodness wecalled the morning of the shoot becausehe had totally forgotten about us…Our repeated phone calls to him have gone unanswered... Our hopes for engagement photos…have been ruined.”

Reputation Results

“He posed us about half the time, saying I know it feels awkward but it looks great in the photos…when we did Finally get those pictures, they looked awkward…he saidhe would email us a link to a website with the photos in two weeks or less…when 4.5 weeks came around and after multiple unreturned phone calls and emails I emailed him expressing the unprofessionalism about not returning phone calls and emails…His not so great photos are not worth his unprofessionalism and unresponsiveness after you employ him.”

Reputation Results

Pier 49 Pizza

WHAT THE DATA SHOWS

*http://online.wsj.com/article/SB10001424052748703447004575449453225928136.html

Groupon Increases Reviews, Destroys Ratings

SOME POSITIVE STUFF…

6 Cases Where Groupon Can Work

1. New Business2. Subscription Model or High Lifetime Value3. Fake Pricing4. Third-Party is Footing the Bill5. Event with Excess Capacity6. Going Broke Anyways

SWEET DREAMS…