Some owners hated it, but that appears to be because they were bamboozled by Groupon's math. What none of them report is the conversion of those customers into regulars. The thread is interesting because they all experienced the same thing: A flood of new customers. It all dovetails with a post on Gawker, in which small business owners describe mixed results from Groupon. These salons are then caught in a deal-loop where they can't escape Groupon! They then have no choice but to go back to the well and run another Groupon deal just to ensure their survival. This phenomenon happens when a salon runs a very successful Groupon deal but spends so much time servicing it that they lose all their original clients. an increasing number of smaller salons now survive solely on Groupon deals. Worse, Groupon ends up being the crack cocaine of small business: and Ireland for Groupon suggests that only 1% of Groupon customers become long-term customers of the merchant. More recently, data from a service that books hair salon appointments in the U.K. Absent Groupon, all those dollars would have been spent locally, albeit at different businesses, assuming that the spender was looking for a bargain. The study estimates that for each dollar taken by Groupon there is a downward multiplier effect on the neighborhood which results in the loss of about $12 more. That money is removed from your community - from your local businesses, the people they employ, and the vendors who supply them. That said, the study points out a truism: Whenever your local cafe, bar or yoga studio offers a Groupon, then Groupon takes about half the value of the coupon for itself. I put the word "study" in quote marks because the data in the paper is pitiful the CSC has no web site, and the paper was forwarded to me by Applaise, a Groupon competitor that sells localized daily deal services. Rather, the grumbling is about Groupon's effect on small businesses and whether it ultimately helps or hurts local economies.Ī "study" by Ed Lang, chief economist of the Community Sustainment Coalition, claims that every dollar spent on Groupon lowers the property value of 12 surrounding properties by about $1 each. The backlash against Groupon (GRPN) has begun, and it's not over the dodgy accounting in the daily deal company's IPO.
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