ND1018116

Title: Groupon Not Hitting the Mark With Retailers

Description: Business owners express frustration with a system that hasn?t generated profits.

Page Content:

ST. LOUIS, MO ? It seems the shine that used to radiate from Groupon is tarnishing, with retailers beginning to complain about their experience offering mega coupon deals to local customers, the Riverfront Times reports.

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And it?s not just retailers who are souring on the Chicago-based deal promoter. Despite generating more than $713 million in revenue last year, it turns out Groupon has yet to generate a profit, as a revised prospectus filed with the Securities and Exchange Commission reveals. Groupon incurred a net loss of $420 million in 2010 and $117 million during the first few months of this year. �

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Clara Moore, general manager of Local Harvest restaurant in St. Louis, regrets signing up for a Groupon offer, citing minimal if any profit margin in offering 50% off a food deal, where half of the revenue went to Groupon.

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While Groupon grew quickly, according to the Christian Science Monitor, a 2010 study revealed one-third of businesses that did business with Groupon earned no money from their promotion. And a study by Harvard and Boston University professors found that a Groupon deal actually has an ?adverse impact on reputation as measured by Yelp ratings.?

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As for restaurants like Local Harvest, it became overwhelmed by redemptions that can number in the thousands, many of which flooded into the restaurant at the tail end of the acceptance period.

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"That last week we were knock-down, drag-out, insanely busy every minute of the day," Moore said. "I mean every minute of the day ? [People] didn't particularly get a true view of what Local Harvest is," Moore says. "We were so overwhelmed."

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Collier Evans, co-owner of Mangia Italiano, also in St. Louis, cites a similarly bad Groupon experience, with new customers who were strictly deal seekers, not likely new customers.

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?The Groupon customers are bargain-hunters," Evans said. "They follow the deal."

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Content Subject: Marketing/Merchandising

Formatted Article Date: October 18, 2011

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