Groupon fail

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Barry Digman
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2011/11/27 15:23:16 (permalink)

Groupon fail

I guess you can file this under "Be careful what you ask for..."
 
LONDON — A bakery owner was forced to make 102,000 cupcakes after being swamped by customers taking up her cut-price Groupon offer, according to reports Tuesday.
Rachel Brown offered a 75 percent discount on 12 cupcakes, which normally cost $40 (£26), the BBC reported.
However, Brown under-estimated the popularity of the deal and was unable to cope when 8,500 people signed up for the $10 (£6.50) bargain.
Brown's Need a Cake bakery, which employs eight staff in Reading, U.K., had to bring in temporary workers through an employment agency to fulfil the orders, at a cost of $19,500 (£12,500) — wiping out her profits for the year.
She also lost between $2.90 (£2.50) and $4.70 (£3) on each batch she sold, the BBC reported.
"Without doubt, it was my worst ever business decision," she told the BBC. "We had thousands of orders pouring in that really we hadn't expected to have. A much larger company would have difficulty coping."Brown, who has run the business for 25 years, was quoted in the Daily Telegraph saying: "We take pride in making cakes of exceptional quality but I had to bring in agency staff on top of my usual staff, who had nowhere near the same skills. I was very worried about standards dropping and hated the thought of letting anybody down.
"My poor staff were having to slog away at all hours — one of them even came in at 3 a.m. because she couldn't sleep for worry," she told the newspaper. "We are still working to make up the lost money and will not be doing this again."
Heather Dickinson, international communications director for Groupon, told the BBC there was no limit to the number of vouchers that could be sold.
"We approach each business with a tailored, individual approach based on the prior history of similar deals," she said, adding the company had been in "constant contact" with Need a Cake.
She later told msnbc.com: "We work very closely with small businesses, but ultimately, they know their businesses best and what they're able to handle."
She added: "Need a Cake wanted to run a national deal with us, but we advised them to feature in a few cities so they wouldn't overextend themselves."
#1

4 Replies Related Threads

    lornaschinske
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    Re:Groupon fail 2011/11/27 17:39:10 (permalink)
    I think she was a little dim to do a discount that deep in the first place.
    #2
    Blissful Bite
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    Re:Groupon fail 2011/11/27 23:01:03 (permalink)
    That's pretty much the standard groupon offer, 50+% discount on some offer.  Groupon does the sales over 3 days to their huge list of subscribers and keeps half the dough...leaving 25%.  Its a tough game that may or may not bring repeat customers and can really consume your capacity with unprofitable sales. 
     
    Her major error beyond actually doing the groupon was not setting a limit on the number of sales.
     
    I was considering doing a groupon but have held off for the meantime.  The sales lady did hint at some flexibility in their margin.  They surely make a fortune.
     
    #3
    lornaschinske
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    Re:Groupon fail 2011/11/28 09:35:35 (permalink)
    She would have been better off to have done a 50% off on a SINGLE cupcake and put a limit on it (like limit two cupcakes per offer). Sounds like some info was missing and/or misunderstood. I still think she was a bit dim to have discounted like that. I think we will stick with our free sandwich promo.
    #4
    MobileCuisine
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    Re:Groupon fail 2011/12/01 10:11:22 (permalink)
    My daily deal here in Chicago included a 5 Big Mac and 5 Fry deal from McDonalds. Groupon has hit bottom imo.
    #5
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