Groupon?

I've been on a Groupon kick lately, purchasing both 1,000 thread count sheets for $49 and two burgers, fries, and drinks from Mad Cow for $10.  And it sort of has me thinking about Groupon for PJP.  And so my question to you tonight:  Do you have feelings about Groupon? If you aren't familiar, Groupon (http://www.groupon.com) is an online marketplace that offers deals on everything from local restaurants to eight-day all-inclusive trips through Europe.  By offering a deal at a mass quantity, Groupon is able offer some impressive opportunities.  Groupon also offers a free app (of course) wherein you can manage your purchased deals.  The app also continually updates...for example, my app currently has 97 new deals waiting to be reviewed.

In some cases, over a 1,000 Groupons for a particular good or service will sell in the course of just a few days.  The exposure to a large audience is definitely a consideration from a marketing standpoint, but the per-Groupon profit is also something to seriously consider.  In short, here are my thoughts about a PJP Groupon (working on the assumption we do a Groupon for a nine-inch pie):

Pros

  • Marketing.  Marketing. Marketing.  Local and nationwide Groupon users can view the offer through the Groupon website and free app.
  • A deeply discounted offer promises to bring new customers through the door.
  • Research suggests that Groupon purchasers often buy other items while in the store.
  • Research also suggests that Groupon purchasers tend to return if satisfied with the purchased product.
  • Cash influx.  (Let's keep it real on the blog...who doesn't like a cash influx?)

Cons

  • Groupon keeps 50% of all sales.  Ouch.
  • In order to make any money, sales must be high volume.  In the example I worked through, PJP would need to sell 1,000 Groupons in order to profit from the deal.  At 500 Groupons, we would break even.  Anything else would represent a loss (not including the goodwill/marketing/market exposure element).
  • Groupons must be redeemed once during the active period.  Employees have to ensure that customers mark the deal as "redeemed" on their app or risk one Groupon being used twice.
  • We must be prepared for an influx of business from Groupon purchasers.  If we offer a 9-inch pie at a deep discount, we would need to increase our store production in order to ensure supply was available.

So I don't know.  I think there are a lot of benefits, but also a lot of risk (and isn't that like everything else in this game?).  Thoughts?  You who use Groupon, would you be compelled to purchase?  Would it make you feel differently about our product?  Non-Groupon users...could you begin to even care less about this discussion?  Am I over thinking it?  Did you know I do that on occasion?

Comments or emails, please.  All input appreciated...

Peggy Jean's Blogpies@pjpies.com6 Comments