A Groupon sweets deal turned sour after the 'Need a Cake' bakery placed an ad for 75-percent off a dozen cupcakes. Those baked goods orders turned to ten bucks instead of the regular forty. But the experience nearly shut down a business spending almost $20,000 to fulfill102,000 of the desserts.
Rachel Brown of the United Kingdom's Need a Cake bakery found herself facing over eight thousand orders of a dozen cupcakes. No word on how 12 cupcakes is normally $40 -- or over three bucks apiece. But the result became about 750 orders more than the bakery's average 100 per month. That's for the company that only employs eight people.
The UK bakery owner was forced to bring in an outside agency to fulfill massive orders outside the norm. Temporary help in fulfilling the extra Groupon business ended up costing nearly twenty grand -- wiping out the company's yearly profits -- and employees working pretty much 24/7 to make the cupcakes. To Groupon's credit, the business owner didn't choose to set a limit on the number sold, with setting a limit available as an option for companies choosing to use the service.
The bakery's owner's dubbed her Groupon fiasco the "worst ever business decision." It's an idea that seems to be proven true for business owners nationwide as well as across the globe -- and often echoed by customers. All is not sweet with Groupon, even outside of the bakery realm and company issues abroad.
The sad words expressed by Need a Cake's owner are almost identical to a statement last year from "Posie's Cafe" in the U.S., after the small business owner lost roughly $8,000 in a Groupon deal. The coffee shop owner offered $13 worth of services for $6 in a partnering the Oregon cafe owner dubbed the "biggest mistake."
Groupon's CEO Andrew Mason officially responded to the Posie's Cafe scenario, kind of, after he kind of had no choice -- the situation plastered across national headlines. Groupon CEO Mason called the Posie's scenario "painful" to read about. It sounds empathetic. But apparently it wasn't painful enough for the company to offer up any respite from that financial 'pain'. And perhaps there should be some empathy toward Groupon customers as well.
The video interview with Posie's Cafe in Portland (OR) is interesting, providing a bit of insight for the average consumer as to how Groupon works. In major cities there's a waiting list for businesses desiring to use Groupon for advertising. The Posie's Cafe owner in Oregon claims Groupon told her that 50-percent off deals usually work best or most effectively. And then there's that little part about the 'take' Groupon, well, takes. The Posie's owner says Groupon wanted 100-percent.
A little-known fact among customers: Groupon once routinely took up to a 50-percent cut in its deals with businesses. Even lesser-known: The coupon company took more. In what the Posie's Cafe owner calls "shady" during her on-camera interview with a blogger, the woman says Groupon originally e-mailed her with a statement the company would take 50-percent instead of more, but not to tell anyone. She says Groupon had asked for a full one hundred percent originally.
That Groupon cut's changed a bit since competition has been on the horizon, now actively working the same "streets" in efforts to garner clients. It probably didn't help that the leader kind of shot itself in the foot, in the beginning, with some businesses sitting on a wait list for half a year or longer -- allowing competition to gain a foothold it may not have had quite so easily. Competition or not, Groupon continues to be plagued by certain stuff that's not only remained but maybe even grown -- like growing ire on behalf of customers and increasing resentment on behalf of business owners serving customers.
While media outlets have featured articles favored toward restaurants using Groupon -- essentially calling customers 'cheapskates' -- a few have tended toward views of what may be more accurate: Maybe a good portion of the businesses using Groupon are using the service as an advertising shot, while instead failing to address shortcomings.
Business owners have been vocal in griping about customers. Customers whom have used Groupon -- especially with restaurants or within the food industry -- have complained about poor quality or terrible service. There's been the claim that companies or restaurants using Groupon are finding themselves faced with an increase in poor Yelp reviews. But the reality is that well-established restaurants or even newer ones with regular clients don't tend to use Groupon. The restaurants that seem to find themselves in need of additional clientele, well, do seem to utilize the service. And maybe some 'business owners' weren't really meant to be business owners.