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 Why Groupon Sucks For Merchants and LivingSocial Doesn’t

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Dr of BBQ

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Why Groupon Sucks For Merchants and LivingSocial Doesn’t Thu, 05/10/12 9:00 PM (permalink)
I just read this and thought it was very interesting. The thread title is the lead from the story not my opinion.
Why Groupon Sucks For Merchants and LivingSocial Doesn’t It doesn’t matter whether you like Groupon or LivingSocial as a consumer or not, because this post is discussing why Groupon is like dealing with a child, for merchants.
As many of you know, I own a few QSR (quick service restaurant) outlets. I also have diversified interests in internet companies. Put 1 and 1 together and you get curious. Since I am in both spaces, I wanted to really dig into the whole group buying deal business and see if it was truly a win for merchants, as it is for consumers. So is it? I took one of my outlets and did a Groupon for it, and then a LivingSocial for it. And let me tell you right now, it’s almost like polygamy- being married to two different women at the same time, but the one you genuinely like is LivingSocial.
First I will talk about Groupon and how it all started. I was contacted by a rep from Groupon about doing a deal for my QSR, so I pondered the thought and said, interesting. We went back and forth for a few days working on what to give a deal on, and by back and forth I mean the Groupon account rep just telling me what would “work” and what wouldn’t be accepted by their marketing dept. After a few days, we decided that $5 for $10 worth of product was going to be the deal. This was not what I had in mind, but I went with it. Groupons “regular” deal split is 50/50 with merchants, so in this case they would take half of $5. They also charge merchants a “fee” for people using their credit cards to buy Groupons. FYI I’m a hard negotiator. I mentioned that I was pondering doing a LivingSocial deal at the time, so my account rep said something like “we really want to work with you and hope you don’t do one with them because they are copycats.” Needless to say, I didn’t accept those terms, and would never. So Groupon came around the block on my terms for revenue split and credit card fees.
The rest of the story is here
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