The Groupon logo is displayed inside the online coupon company's offices in Chicago.(Photo: Charles Rex Arbogast, AP)
This holiday season, small retailers are leaving Groupon off their lists as far as sales strategy goes.
shopping season is the biggest one of the year, and small businesses
often rely on sales made during this period to bring them into the black
as the year comes to a close.
A sales strategy that didn't work
during the rest of the year is out of the question for the holidays,
says Pamela Springer, CEO of online small business network Manta.
doesn't bode well for Groupon and other daily deals sites. Only 3% of
retailers got repeat customers out of daily deals promotions, according
to a survey Manta released Oct. 30.
"They're doubling down on
things that work, and leaving things that are less proven or they've had
experience with and didn't work off to the side," says Springer.
businesses aren't getting repeat customers out of Groupon deals,
they're losing money, says Anthony Bruce, CEO of retail data analyzer
Applied Predictive Technology. Groupon often charges businesses as much
as half the revenue of a deal sale, which is usually a drastic discount
"If there are future purchases that occur because of a
Groupon, that's great," says Bruce. "If it's an incremental visit I
wouldn't have gotten anyway, it's bad. If it's a visit I would have
gotten anyway but did it with a Groupon, that's terrible."
Untermeyer says she won't use Groupon this holiday season, because she
lost money on the five daily deals she ran last year for her business,
TravelKiddy, an online store that sells toys and games to keep kids busy
during road trips or plane rides. She ran her first $10 deal for $20 of
merchandise on Eversave last November, trying to snag some holiday
travelers, and ran four more similar deals on niche mom-themed deals
sites, hoping to score new customers.
It didn't work.
can tell how many people we've had repeat, and it's eight or nine out of
3,000 deals," she says. "We ended up in an overall loss, even factoring
in the marketing benefits."
Groupon sales chief Kal Raman says
Groupon helps businesses retain customers through its Groupon reward
program, which is sort of like a frequent-flier program for customers.
The program helps businesses track purchases a Groupon customer has
made, and after a certain level of spending is reached, Groupon
automatically sends the customer a free deal.
become their loyalty-management company," says Raman, who sees Groupon
as a great way for retailers to sell inventory they'd otherwise be
sitting on. "As a small-business owner, you can aim high, and we can
hedge that risk."
Will Ander, senior partner of retail strategy
firm McMillan Doolittle, says liquidation is the only good thing Groupon
does for small retailers. "It's more effective than giving it to the