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Baker Has to Make 102,000 Cupcakes For Grouponers
Rachel Brown, owner of the small Need a Cake bakery, became a victim of the old adage, "Be careful what you wish for. You might just get it." More than 8,500 people took Rachel up on her Groupon offer of a 75% discount on a dozen cupcakes, forcing her to make over 100,000 cupcakes to fill all the orders. In the end Brown lost almost $20k. "We take pride in making cakes of exceptional quality but I had to bring in agency staff on top of my usual staff, who had nowhere near the same skills. I was very worried about standards dropping and hated the thought of letting anybody down. My poor staff were having to slog away at all hours — one of them even came in at 3 a.m. because she couldn't sleep for worry," she told The Telegraph. "We are still working to make up the lost money and will not be doing this again."
The 'Law of Unintended Consequences' strikes again!
75% off is a seriously deep discount, what did she expect would happen?
An enigma, wrapped in a riddle, shrouded in bacon and cheese
... be careful about the special offers you advertise online. Groupon isn't at fault here - if anything, the complaint is that it did its job too well. If you put a sign in your window offering a special offer, you can take it down whenever you want. If you stick something out on the net, you need to be very sure that you can handle a bit of scaling around the response.
Still, full credit to the bakery for actually meeting the orders. I suspect lots of far larger retailers would have tried to weasel out of the deal they'd offered in a situation like that. And so far as I can see from TFA, nobody is talking about lawsuits.
I seem to recall reading that Groupon allows businesses to limit the number of offers available. That is, rather than having to deal with 8,500 orders, Ms. Brown could have limited the offer to 100 (or some other arbitrary number) people.
If my understanding is correct and such a system exists, it would be foolish for a business to not use it.
I may hate Groupon, but this person has no one to blame but herself. Do the math. If you sell that many coupons, even if only a fraction of them are redeemed, that's a lot of cupcakes.
"Nature doesn't care how smart you are. You can still be wrong." - Richard Feynman
That Groupon is not good business? Lets discount more than 50%, then pay a hefty commission on top of that.
Unfortunately these small businesses don't do the math and there are many stories like this.
I'm sure she can do it. It'll be a piece of cake. 102,000 pieces.
There's a spot in User Info for World of Warcraft account names? Really?
Are people bad at math or something?
From their FAQ:
Can I set limits on my deals?
Yes. You can limit the total number of purchasers. You can also set restrictions on how customers use the deal. For example, if you're a restaurant you can limit the use of Groupons per table or per order.
BlackNova Traders
Let them eat cupcake?
Having to work for a living is the root of all evil.
Why didn't she simply limit the number of coupons that could be sold? I've seen other Groupons with limits. Sounds like she fucked up.
rooooar
Stories in the press abound of small business retailers, particularly restaurants, living to regret making an offer on Groupon. These entities live on forming relationships with customers. Groupon brings in people who are only there to eat on the cheap and won't likely return.
Example story: http://posiescafe.com/wp/?p=316
"we met many, many terrible Groupon customers customers that didn’t follow the Groupon rules and used multiple Groupons for single transactions, and argued with you about it with disgusted looks on their faces, or who tipped based on what they owed (10% of $0 is zero dollars, so tossing in a dime was them being generous). "
"For the first 100 people" would have been a good stipulation on that groupon. That would actually serve the purpose of the offer. The first 100 would get cheap cupcakes sure, but the following of people after the first 100 would likely buy cupcakes anyway without the coupon because of the "well, im here, might as well" attitude a lot of people have.
She should take a hint from KFC, not fulfill the promise, and just delay it in courts until it turns into a $3 coupon years later that requires OCD record keeping to capitalize on.
Oh wait, this is a small business, those don't hold voting rights in our corporatocracy.
mov ah, 4ch
int 21h
I wonder if the Groupon sales rep advised her to put a limit on the number of people that might take up the offer.
In fact, it is surprising that having a limit on the number of people that can take up the offer isn't the default. But wait ... the more people that take up the offer, the more money Groupon (and probably the sales rep) makes ...
even with the discount it's $10 for 13 cakes that have a total ingredient cost of, I would guess, less than a couple of dollars. It seems like she should be able to make money on a deal like that, especially as she does not have to worry about the cakes going stale waiting for a sale. Also, she now has reached 8500 new customers, which was presumably the point of the whole thing. I suspect her business mistake is going into a venture where you have to sell a $2 cupcake, even when made in bulk, just to break even.
Nullius in verba
I fully expect several Hollywood creative teams have jumped on this piece and are working on the 2011 version as we speak.
With the usual creative license, i.e. each Groupon order is individually printed from an inkjet printer perched on a rather high table so they can fall to the floor around the harried shopkeeper and bakers.
I don't see how Groupon can be considered long term viable, if this is the kind of press they're getting. This lady will never be doing that again, and she's going to go to her local chamber of commerce meetings and say, "I had a bad experience with Groupon". Any salesperson from Groupon will have an uphill battle selling to anyone in that area again.
How hard would it be for Groupon to make the default limit be a small number? If the business selects a large number with a large discount, then their forms could ask, "Can you really service this number of customers over this time?"
I know it's easy to blame the baker for this mistake, it's not a viable business strategy to kill your customers. Customers are supposed to be bled slowly, so that you can bleed them some more tomorrow.
All ideas^H^H^H^H^Hprocesses in this post are Patent Pending. (as well as the process of patenting all postings)
You'll pay £3 at a supermarket for a cupcake.
£26 per bakers dozen cupcakes!? Is this a normal price? That's $40! Are these normal prices in London?!
This is only the latest GroupOn horror story, and many of them probably don't make the press. Personally I won't even use GroupOn because I feel so sorry for the retailers involved. It's a personal decision.
The next horror story will be from the people scammed by the IPO who thought that they were buying into a company that actually created something of value. Hard to believe that Google once offered billions ($5.75 billion, I believe) for this vaporware company -- and GroupOn actually turned them down. That was the luckiest turndown since Yahoo! refused Microsoft's (by today's standards) insanely generous offer.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
Groupon should offer a staggered approach. First 100 customers get offered 75% off. Next 100 get offered 50%, then 25%. After a time, the system could float to the discount that was optimal, with some total per day limit.
All ideas^H^H^H^H^Hprocesses in this post are Patent Pending. (as well as the process of patenting all postings)
Interestingly, I was just looking at a Groupon offer for a local cupcake business, offering up to 55% off one or two dozen cupcakes. I'm in a small(er) city, so don't think an event like this story shows will happen here. Hope not, anyway. I appreciate local businesses!
When they made a site for Penny to sell blossoms that she made by hand and had one day rush that resulted in thousands of blossoms from the LGBT community of somewhere.
I never thought I would see the day where something so innocent like that would happen in real life.
Should always do the math and multiply by 1 million whenever you do anything with the internet just for risks sake.
Things can get ugly real fast if you don't do enough Risk Analysis.
Just look at Zynga. Too much growth and not enough income that really hit them hard.
She probably didn't have time to think of approaching a school for work; a temp agency can have workers there in an hour.
The real WTF of this is her not putting a limit on the number of orders possible. That is possible, right?
I don't read AC A human right
Do'oh! Those SHARKS!
Of course the people who ORDERED THEM will be blaming the maker for obeasity.
just don't be responsible.
Where is Homer?
Yeah, I would have jammed the door with my foot. That is one of the things you have to do in business, stop losses. I look for her to go out of business from this.
I object to power without constructive purpose. --Spock
Exactly.
How long do cupcakes take to bake? How much does the oven cost to run? How long do they take to cool before you can begin decorating? How long do they take to decorate? How long do the utensils take to clean between batches, plus the resources (water, soap, drying time) to do so? How much fridge space do you have, and how much do they cost to run? How much are you paying your staff? Note that for a big rush like this at least one of them will be on full-time register duty and unavailable for baking/decorating. Is anyone going to be free to take new orders (e.g. that couple that came in planning to spend a few hundred on a wedding cake...)?
The raw ingredients are one of the smallest contributors to cost.
PHEM - party like it's 1997-2003!
Why are people still making food like this? I thought 3D printing and Makerbots are revolutionizing everything?
My mother in law worked for a groupon competitor. Groupon is known for purposly missleading and screwing their customers. The bad thing is that the businesses that are most likely to fall for it are little mom and pop places that may not survive.
The shine of "getting a deal" is soon to come off - the Groupon folks should have cashed out when they could.
"Twelve Cupcakes with a Choice of Flavours and Designs for £6.50 from Need a Cake (Value £26)." "Today's deal gets Groupon gourmands twelve individually decorated cupcakes from Need a Cake. Customers can construct their ideal cupcake, choosing from sponge flavour, icing and decoration options."
In the first paragraph, I think the author of the article erroneously concludes that this is the normal price. She might sell her cupcakes at a normal price of £7 and always tell customers they are a £26 value.
Normally £26? That's $16.64. A dozen! (Just over $1.38 each.) With the discount, it'll pop it down to $4.16/doz.
Well, I'm here in the states, so let's go shopping, shall we? (Let's shall!)
1 Box Jiffy brand mix = $1.25 (makes about 18 average or 12 large muffins)
1 Box Jiffy brand frosting = $.75 (more than enough for muffins)
Food coloring = ? (most bakers already have this, only a few drops needed)
2 or 3 eggs = $.50-.75 (.25 each - 2 eggs for yellow or chocolate cake, 3 whites for white cake)
About another $.25-50 for milk/oil/PAM
Figure about $.50 for electric/gas use (mixer, oven, etc)
So, for about $3.25-3.75, I can make my own damn muffins cheaper than her. Which I have done on many occasions for coworkers, and haven't had any complaints, yet. Having a professional do this -should- run about $4-5, her Groupon price, as she'd most likely have a bulk discount on all her essentials.
Doesn't anybody bake any more?
(For the record, I'm a guy who likes DIYing.)
She only lost money because she had to hire other people. She had figured she would be fine if it was just her and her employees making the cupcakes. There's 8,500 people she's marketed to and with even a small fraction of returning customers she'll make her money back rather quickly. If around 5% returned just once or even a half of a percent returned several times, she'll still come out ahead in the end. It looks like her cheap marketing tactic just turned into an expensive one, but it'll still give her good numbers in the end. I would be ecstatic if that happened to me, but complaining about it gets you even more business.
Anyone who offers a sale below the cost of manufacture is seriously lacking in business sense. At worst this should only have netted zero. Any model where "the more you sell, the more you lose" is just stupid. That, and if you can't make a dozen cupcakes for £6.50 (~$13!) after cost, you should really give up baking.
--Not to be worried, Pitr fix.
Three words could have saved the baker a bundle of money and prevented a big headache.
I've seen lots of Groupons with a maximum number and I can't quite fathom why more businesses, especially small businesses like this one, don't figure that out and calculate a reasonable max they could deal with.
My wife owns her own photography business (just her and an employee) and she had been toying around with the idea of using Groupon and LivingSocial. As much as she hates spreadsheets, I made here sit down and model what the deal looked like and what her break-even points were. Talk to your Groupon/LivingSocial rep. to get stats about similar deals (as much as they can give you)--quantity, conversion rate, customer conversion, etc and be conservative since the rep will definitely paint a rosy picture. After doing that, she made some very important changes to the structure of the deal she made with LivingSocial that protected her against some run-away scenarios that would have cost her money like this person ran into and the LivingSocial deal has been a great success.
The other thing, hinted at by the owner of the bakery is your brand. If all you're concerned about is pushing product and volume, then a low-end price for the Groupon/LivingSocial deal is the way to go. But be aware that the lower the barrier to entry the less the customer values you or your services. For service-based businesses (like my wife's photography company), a higher price for the deal is more likely to bring customers who value service and quality. You can still offer good discounts while having a higher price point by carefully choosing what you discount and what they are purchasing up front.
Bottom line: know who your optimal customer is and do the math or you're likely to get burned.
Faith is a willingness to accept something w/o complete proof and to act on it. Reason allows you to correct that faith.
We have fun and games!
A few months ago a local restaurant had a Groupon which my wife purchased. It was a 5 course dinner for 2 for $20 on weeknights, or $30 for Thursday - Sunday. Within 2 days she received an email from Groupon stating that the restaurant was no longer honoring the deal. Groupon gave us a full credit (not refund, just money we could use towards another deal) Ever since this, my wife has not wanted to go back there.
The irony of this was that we discovered this restaurant through a different deal website, and it quickly became somewhat of a regular for us. Honoring a previous deal made us customers, not honoring a subsequent deal made us no longer customers.
Introducing Microsoft Vacuum 1.0 The first Microsoft product that doesn't suck.
I would like to hear her story on why there was no limit before saying she is stupid for not putting a limit on it.
Remember, Groupon has shady sales tactics (there are many articles out there saying this). A sales person could have advised her not to limit it because cupcakes in that area never sell more than ~200. Groupon got a cut on all those cupcake deals.
I would believe Groupon pushed her to not limit it rather then tell her to limit it based on sales around the area. Yeah she should have done the math, but you should know how Sales people work and how pushy they can be in their knowledge about the business.
I'm not a fan of Groupon. It's a flashy fad that's bringing mass-marketing to the everyman, and launching lots of small businesses head-first into ruin. The people who would conceptually stand to benefit most from Groupon's reach are also those who can't actually afford the costs of unbounded promotion. My greatest beef is that Groupon keeps half of what you pay, so if a shop is offering a 50% discount, well the owner is actually getting only 25%. Groupon is printing giant piles of money for essentially running the most basic web advertising.
Cheapskates flock to the ridiculous bargains. Owners flock to the millions of eyeballs. Both get fleeced in the end, because you always get what you pay for. I've actually come to think less of businesses that advertise via Groupon, it is almost always a desperate plea for attention for a product or service that cannot stand on its own.
-Billco, Fnarg.com
I've known a number of businesses that got burnt by Groupon. One of the pubs we used regularly did a groupon deal and we went in and bought a lot of drinks with the meal. Most other people just asked for a glass of water and never came back.
There are two situations where Groupon works:
1) There is no cost to you (Gym membership) and there is a chance to up sell.
2) You have sourced an item at a ridiculously cheap price and even with Groupon taking 50% you are going to make a profit.
On (2), I knew somebody who sourced suits for $30, created a web site for the sales ploy, sold a 1000 units through Groupon at $250 and made a fortune.
Groupon can be extremely destructive to your business.
All you have to do is take a cup of flour,
Add it to the mix.
Now just take a little something sweet, not sour,
A bit of salt, just a pinch.
Baking these treats is such a cinch,
Add a teaspoon of vanilla,
Add a little more, and you count to four
And you never get your fill of
Cupcakes, so sweet and tasty.
Cupcakes, don't be too hasty.
Cupcakes...cupcakes, cupcakes, CUPCAKES!
------
Now just multiply that by 50,000 or so.
let's hope for her that the fame will translate into future profits
Mrs Brown said: "We had thousands and thousands [of orders] pouring in. We had to cut it off at 8,500 orders. As soon as we were making, packaging and sending the cakes out we were on to the next order. It was non-stop.
(emphasis added) Near the end of TFA:
Heather Dickinson, a Groupon spokeswoman, said there was no limit to the number of vouchers that could be sold. She said: “We approach each business with a tailored, individual approach based on the prior history of similar deals.”
New headline: Internet-savvy baker spends £20k on local advertising and then gets millions in free international advertising + local sympathy purchases.
Groupon absolutely allows merchants to limit deals. Merchants simply fail to actually do so.
I couldn't find the video, otherwise I'd put the link here, but a few months ago, I saw a video by 3 customers of Groupon: scuba dive shop, steak restaurant, and cupcake shop. Basically, Groupon takes 50% of the coupon value. So, if a merchant gives 50% off retail on the coupon, they only get 25% of retail. The cupcake shop experienced the same thing as this baker, but revised his idea of what Groupon is and is using it successfully. He now thinks Groupon is marketing with associated costs and just budgets accordingly. He also put some stipulations on the coupon: 1. No choice of flavors, you get what he has in stock and they choose what you get. 2. You must notify him advance (2 days), if you have a big order.
I just don't understand why Groupon doesn't set expectations properly with their merchants. When these bad things happen, all 3 (Groupon, Merchant, Customers) lose. Groupon loses follow-on business from the Merchant. Merchant gets overwhelmed and a bad reputation. Customers get a bad product or experience. If Groupon sets the expectations properly, I don't see why all three can't have a good experience. I assume the Groupon sales people are just pushing volume and don't have any training. But it should make sense that by setting expectations properly and coaching the Merchants, that Groupon would have follow-on business from the Merchant -- a much better business model than pushing a one-shot coupon.
...perhaps she should hire a BUSINESS partner, since she may be a terrific baker but crappy businessperson?
Doesn't take a PhD to say "let's say we offer a 75% discount....what sort of hit might we take?"
-Styopa
Groupon made how much off this sale? I understand that Groupon takes a cut off of each sale for it's self so wouldn't that mean it is against it's best interest to do any kind of limiting of orders.
http://www.groupon.com/business-faq
So she really didn't even make the 6.50 on each sale, did she? Read this about how this one company actually had to pay Groupon 50% of what it made. http://posiescafe.com/wp/?p=316
I know one business which has good results with Groupon. It's a riding school (horses). The Groupon lessons are an introduction to riding, with about an hour on the ground grooming and learning about horses, and an hour on the horse. Groupon insures that enough people sign up to make up a profitable group, and Groupon pays for no-shows in bad weather. This insures that each lesson brings in a known income. Some of the people discover they like horses and come back for more lessons. But even without that, it's profitable.
This is the right way to use Groupon - not as a traffic builder, but for something that's done in a group.
This is a bit like buying a TV ad and complaining that it is costing you money for the airtime. The idea behind groupon is that you attract new customers with crazy low one time prices. Of course it may cost money. Advertising always does. In the end all she should care about is whether or not she adds enough extra customers to purchase more than $20k, or whatever her costs were do to this promotion, later on down the road.
I am remembering an episode on I Love Lucy where they were selling salad dressing. THE MILLION DOLLAR IDEA Episode #79, Aired January 11, 1954
spend several very pleasant days fantasizing about what life would be like if you do win. Seen that way, it isn't a bad bargain at all
Sure it is. I can fantasize just as effectively for free, and have about the same chance of my fantasies being realized.
This is a problem well-known to those considering participating in Groupon. A minute on the web would have forewarned her that there could be a problem of scale. She could have limited the offering.
If Slashdot were chemistry it would look like this:Cadaverine
Let the seller beware.
When you run the 75% off sale, you are supposed to first mark the price up by 150-200%. Nub got pwned.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
Because you're buying them for an "occasion".
If you are tasked with providing dessert, stopping at wal-mart on the way to whatever occasion it is to pick up a dozen cupcakes for under $10 is tacky.
But if you stop at the "gourmet" Cupcake place and spend $40 on "special" cupcakes, that's OK.
You're really paying for the ability to buy your way out of having to actually bake without the social stigma of being too cheap/lazy.
paintball
Not that I would ever do such a thing. I tend to avoid hanging out with people who would assign social consequence to buying the Wal-Mart cupcakes. But lots of people who don't operate that way.
paintball
...What's the price of advertising in all the newspapers etc that are covering this story?
paintball
The obviousness of Groupons scam is obvious enough to most but the more subtle one is the lie of advertising. Advertising does NOT work as advertised. That is something to remember, advertising is a product SOLD by advertising agencies. So the companies telling you advertising works because they studied it are advertising companies... conflict of interests?
You have two basics forms of advertising. The first people barely think about but is putting your products and your shop on display. It is not just the sign above your door but prices on your products. Think about this simple thing, did you EVER walk out of store because you couldn't find the price so thought "fuck this". BAD advertising. A lot about this basic advertising is convincing people to enter your shop because they think that what they want can be got at an acceptable price. For stores like bakeries this means charging the right amount for the right amount of convenience and quality. People complain about Starbucks being to expensive but they got fast steady quality service (compared to all the other alternatives at premium locations. I can get a cup at a burger chain for less next door at say Utrecht Central station in Holland but GOD the burger joints service is piss poor).
But if you want MORE customers then pass by traffic. What do you do... advertise? Do you READ advertisements? No? To busy. Exactly. Anyone that can afford a 5 dollar cup cake is far to busy to read the local newspaper. Same with banner ads. Who here sees banner ads? If you see banner ads, you are in a lower class. Elitist? Damn right.
Research has shown the Groupon's claims on age and income of their users are over-estimated. They are an older demographic and a poorer demographic. This is a group who hunts coupon's. They use a coupon and then don't come back unless they get another coupon. They are deal hunters.
If you got something to dump, then deal hunters might be worth going after but if you got a premium product that doesn't get 75% cheaper in total costs with bulk, then Groupon makes no sense.
Groupon works for HP Printers because HP makes its money on ink. It makes sense for products you need to shift now and you got to much off or make a very high margin on but otherwise, it NEVER makes sense.
Food products and services do not work with massive discounts aimed at bargain hunters.
It would be like selling Rolls Royce at 75% discount hoping for repeat business.
Not only do people not NEED two of them but those who buy it at the discount can't afford the regular price AND at the same time you are diluting the price of your product for your regular customers.
Or how would you feel if the person in front of you paid 1/4th of the price charged to you? If I was in that store behind a groupon customer and they tried to charge me full price they would be picking cupcakes out of their ears.
A european chain stunts with taxless days, basically a 20% cut that amounts to the regular sales tax. So... I never buy from them unless they run one of these events because I can wait for them or another chain to run one when buying a TV or such. Turn your customers into bargain hunters and bargains they will hunt.
Stay away from advertising unless you truly and fully understand what it is going to cost and what it is going to deliver you. It is like gambling. Or lawsuits. Casino's, lawyers and advertisers ALWAYS win.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
...the way you make Groupon work is you offer a deal that gets a customer in the door so you can sell them something else.
For example, a restaurant might offer a $20 food for $10 groupon. The restaurant gets $5 from the groupon, but hope you buy $40 in food and drink, and bring some friends with you, so they might get $80-$100 in full-price sales because of the $15-off groupon.
Another example is spas or photographers - offer a 50% off groupon for a basic service, then when the customer is in, upgrade them to more services.
But, if you've sold so many groupons that your entire operating capacity is eaten up just fulfilling the groupons, then you have no capacity for upsells, and you've killed your ability to upsell and thus make the groupon work for your business.
This business owner should have done a coupon for a half dozen cupcakes, limited it to a reasonable amount of groupons, then always tried to upsell the redeemer to a full dozen or two dozen cupcakes, and they might have made some money.
paintball
I suspect that with the loss came publicity that's going to prove to be worth FAR more than £20,000. The fact that you and me are talking about her small bakery in the UK is testament to that.
I think the neat thing here being glossed over is that she actually followed through on this, even going above and beyond to hire extra staff to meet demand. She could have easily played the "while supplies last" card, or done any number of other "shady" things to try and avoid fulfilling all of the requests. I know for a fact if this had happened somewhere around where I live, the proprietor would have fed a line of bullshit and invalidated the coupons or some crap.
There's that, and the fact that the Walmart cupcakes were made using Chinese flour, in a Mexican bakery, and then shipped 2000 miles by a non-union trucker who was only permitted 6 hours rest before resuming his driving shift.
PS - the meat you get at a local butchery is also way better quality than Wal-mart's.
On an other sight, she can see this as an add campaign that costed 20k pounds and that bring more than 8500 customers to her bakery. In those 8500 there might be a lot of new customers and of those there will be a part that may become new regular customers. So if this loss traduce in a sale increase in the long term, what appear here as bad move now may become a good one later.
Does anybody working in publicity could us tell if a 40k add campaing that bring 8500 customers to a bakery would have done well for the price?
I call bullshit. 6 pounds 50 should easily cover the cost of making 12 cup cakes - especially if you are making 102 000 of them.......
Participatory Governance : The only feasible option for a real democracy, where everyone really does have a say.
It's only a matter of time before GRPN and their fancy IPO are dead in the water.
The vast majority of these Groupon deals are good for Groupon and no one else. Combine that with the fact that there are no obvious barriers to entry for their business model and there's a limited window for them to prey on idiot small business owners before word spreads that Groupon deals are not good for business and their company will be reeling soon enough.
Oh and yes, I really do emphasize *idiot* small business owners... You don't need a PhD in Economics to figure out that if you offer a discount in which you lose money on each transaction and don't set an upper limit to the number of transactions, your risk is not bounded.
You don't have to set any special limits on the offer. If you produce your normal amount of cupcakes for the day it is reasonable to say "sorry, we're out of cupcakes" when you run out. There is no legal or moral obligation to make more and especially not to hire staff to meet demand.
She could have easily turned this to her advantage by posting a sign saying "We've doubled (tripled, whatever is reasonable) our cupcake output but we can only make X per day. If we're out, you are welcome to try one of our delicious cakes or come in bright and early tomorrow for a cupcake. First come, first serve." This would have satisfied most reasonable people and would likely increase business without any massive expense. As for the unreasonable people, you can't satisfy them and they probably just came in for the deal anyway and would not be a returning customer.
They can claim they approach each business differently and try to help, etc etc. But I'd dealt directly with groupon's salespeople a number of times. They ALWAYS want an unlimited deal, and always ask for a higher percentage of the total profits if you want to set a limit. I think they must get a bonus if they bring unlimited deals in.
I'm mostly curious to what people's experience is
How many people bake? I mean real pastry baking, not the prepackaged mix.
How many people have been to a cupcake shop? I have a couple in my area, but they also make cakes.
I love to cook, in almost all forms: Cooking, grilling, frying, roasting, and baking.
I now some people are excellent at baking, and horrible at the rest, or horrible at baking but exceptional at the rest.
Baking is a more precise science. Everything has to be properly measured. Simple variations in ingredients or processing can have profound results.
There is a huge difference between All Purpose Flour versus Cake Flour; Instant Yeast versus Cake Yeast. And then there is the knowledge of how it all goes together.
Throw in frosting, and piping on whatever little decorations go onto the cake.
Now take the cupcake. It is smaller, has more surface area, and requires more manual labor (frosting is a pain unless you are really good at it).
Cupcakes are the least forgiving. It is a cake, that is not a cake. It dries out significantly faster than a regular cake due to its increased surface area. Even if the cupcake is perfect coming out of the oven, it probably will not be after several hours in a display case. And its not like a cake store wants to sell day old cupcakes. The frosting picks up aromas and what nots just sitting around. They are either given away or thrown out.
In other words... cupcakes are a royal pain in the arse...
I know several people who have dealt with Groupon, and Groupon was careful about setting reasonable limits with each of them. I guess YMMV depending on your sales rep.
My Other Computer Is A Data General Nova III.
If you are tasked with providing dessert, stopping at wal-mart on the way to whatever occasion it is to pick up a dozen cupcakes for under $10 is tacky.
Life lesson: I never share a meal with anyone who uses the word 'tacky' to mean anything other than 'weakly adhesive.' It helps the digestion immensely.
I can't imagine why anyone would offer such a discount in the first place, through Groupon or otherwise.
Sure if it's end of line, end of the day, and therefore more about clearing inventory for which you might otherwise getting nothing, yes but not as core business.
Most people would assume you aren't losing money on the deal, so such a huge discount you are effectively saying that normally you are vastly overpriced.
Those who care about getting a "premium" product and saving a large amount as a one off, almost certainly isn't your target market, if the buying decision is largely influenced by price they aren't suddenly going to start regularly paying 4 times as much.
So you potentially tell your target buyers that the product you sell is overpriced and they could get the equivalent cheaper elsewhere, it isn't the premium product they thought it was, whilst attracting in a load of others who are unlikely to make further purchases at your regular price.
Seems a bad idea all round.
From reading some of the linked blog entries, it sounds like some of Groupon's salespeople are lying to businesses or are being more pushy then the CEO intends. Perhaps Groupon has some salespeople who flat out lie to businesses who need to set sales limits? Things like this happen when a company grows very fast.
No, I will not work for your startup
Amen. I did a cupcake groupon, and although I don't have to make 100.000 cupcakes, I am still feeling the sting. I was so not prepared and was not coached in any way, a bad decision and have met some of the worst and best people out there. The stress caused me to lose 20 lbs rapidly. I know there are alot of them that wont come back because they just want the deal. Its a hard lesson to learn. You only think about the advertising and the exposure hoping it will bring new customers. Its really not all its cracked up to be.
It's a good thing the offer expired before she hit the 640k limit.
Seriously, arguing about cupcakes and coffee? My grandpa would of slapped me in the face.
You could stop at Walmart and buy their cupcakes, then remove them from the box and put them in your own containers. If your friends are looking for the label in order to judge you then maybe find better friends. This is essentially the American equivalent of the $40 melons in Japan, they're being bought in order to show that you can afford them.
Beautifully and accurately said.
I find this genuinely intriguing. If I'm cheap and lazy then I will be cheap and lazy... and confident:
"Yeah, I couldn't be bothered to spend 2 hours making small iced cakes for our potluck nor did I think it worthwhile to spend $39 on a dozen cupcakes when I could just get a Costco cake for a tenner. I see you brought fried chicken from Albertson's. Lemme get in on some of that..."
See? People confident about the insecurities derived from assumed social expectations help other people feel comfortable about their insecurities.
But that doesn't mean I don't understand. Some people feel very self-conscious about how they think they will be perceived. Some of those people have little choice but to associate with people who are genuinely judgmental about such frivolity. To them, I say, "Buy the $39 cupcakes and swap them out with the Sam's Club special. Keep the expensive ones for yourself just to spite those who would seek to evaluate you on the basis of the complimentary food you provide to others."
Quite honestly, if the people at the party I'm going to are too good for the $10 cupcakes, they can go to hell. Given the option, I'd probably buy 2 boxes of the $10 cupcakes, spend $20 less, and everyone would be happy.
"Those who would sacrifice essential liberties for a little temporary safety deserve neither liberty nor safety." - BenF
They did not lose $20k ... they spent $20k on marketing. If you're in business and you don't understand spending money on marketing your product, you're probably not a very big business.
No matter what you may believe on the subject, marketing can make or break a business, and good marketing is often worth spending a lot of money on. Just ask Coke, Pepsi, Dominos Pizza, Apple, etc.
It costs you $20k to fill orders at a loss for which your hope is that many of those people will either want to buy more at full price or create buzz about your product among their friends and associates. Eventually it will either pay off or not, but the immediate cost isn't worth discussing as though it were burned money.
- Michael T. Babcock (Yes, I blog)
Actually, if you knew anything about walmart you'd know that it most likely came from the same town, certainly within 100 miles of the store. Even with American's requiring overpay to do menial jobs, its still cheaper to bake locally than ship across an ocean. We have automation for the bakery and can the truck still has to drive them in from somewhere so we don't buy food from overseas.
On the other hand, guess where most American beef ends up? Not in the US!
P.S. Before you bitch about walmart, get a clue about whats really going on, bitch about the things they do wrong, not the the things you're too ignorant to realize they do right.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
You can go to some trendy store, but if you know an actual gourmet (and I do), you can get much better stuff. I bought grandma a $200 sheet cake. Rip off? Nope. It had three layers and was elegantly decorated and carefully filled. I let them make most of the artistic choices (I believe I asked to "decorate it with flowers or something" but they really went all out with a special arrangement of cut fruits and flowers made of icing and such). The cake itself tasted exceptionally good.
It was *not* the same as some crappy grocery store sheet cake, which would've been the same as using a mix. But this guy trained for 25 years. He's an actual, professional chef. And his skill was worth it. Everyone who attended that party remembers the cake more than anything else....
In short, I don't doubt that there are people selling overpriced crap, but don't discount the fact that there are people out there who are really good at what they do.
I'm pretty much the same way. Heck my pantry is chock full of store-brand stuff because that's pretty much all I buy. For the most part it all tastes pretty darned close to each other. This is compounded even more when you're buying basic ingredients. In the target shooting community when people get to talking too much about tricking out their guns, there's a saying (and pardon me if this is perceived as racist): "It's the Indian, not the arrow that makes the difference.".
Heck when it comes to traditional southern cooking my grandmother was pretty much the best cook I ever knew, and her cabinet was filled with nothing but Piggly Wiggly brand stuff.
"People who think they know everything are very annoying to those of us who do."-Mark Twain
Groupon itself suffers no risk thanks to its business model. The clients, on the other hand, end up providing their services at 75% off (50% off from the client, plus Groupon takes half of the remaining 50%). In addition, the client gains no real benefit; the majority of any new customers they may get are stingy coupon-clippers who generally refuse to pay normal price for anything. In some service-based businesses, this may even include people who simply refuse to pay for the service done.
Are you sitting down? Because I have some shocking news for you. It was really an actor pretending to buy the expensive necklace. Just an actor, reading a script. About a fake diamond dog collar. It was all fake.
Stop making groupon sales below your per unit break even threshold, and add a line about subject to back order and availability blah blah blah. You wont make a profit in the long run, but no one can cry foul when it takes time for there cupcakes/other products to be ready. You get your name out there, people get a deal on your product, every one goes home happy.
This isn't the first groupon sale to go to hell and back, and god help us, it wont be the last.
After having been to some countries that don't tip compulsory, I sometimes really wish they'd introduce it. London wasn't bad, Japan had good service, but I really, really want to explain the custom of "bribery" to German waitresses. I'm sick of the times I've sat at a table of people with empty glasses wanting another beer while the waitress sat around and talked to the bartender. Once she gets your order, they stand around and talk some more. Eventually, they'll get around to brining you your God damned beer.
Meanwhile, you don't have to tip, but it is expected with expected service. Bad service deserves bad tips. This is usually included into the price of whatever you are buying in the form of the pay the service industry gets. I've been a waiter and a pizza delivery driver. I know what those people go through and usually tip well, but also have no compulsion to tip for bad service. I also know that they recognize return customers who are good tippers and give them the best service.
With the death of print such as local newspapers and magazines, they are becoming one of the few ways to advertise. While Google is getting better and better with targeting advertising on websites, most people spend lots of effort to make sure they never even see it. The problem with groupon seems to be that they do not advertise to the general population which you want because you might get further business, but rather to a population of cheapskates who will never return. Unless targeted localized advertising on the web becomes easy for the small business (at least as easy as Gorupon), then Groupon has a large selection of marks to fleece.
Getting the directed message out to 8000 possible customers for $20000 is pretty cheap. Local Ads are expensive and difficult.
You need to find a good quality local bakery. For example in San Jose there is Aki's Bakery and Dick's Bakery. Aki's is known for their great cupcakes (especially guava) and Dick's is known for burnt almond cake which is sold through a few dozen local restaurants, but you can order them for pick up as well. The pastries and cakes at these two places are not cheap, but cheaper than trendy boutique cupcakes and infinitely better. I once bought some cupcakes from Crumbs in Chicago, it was the first time in my life that I didn't bother finishing a cupcake due to boredom.
I don't know about you, but I trust a bakery more if someone put their own name on it.
Damn, there's a whole crapload of people on Slashdot who like them some cupcakes.
IIRC the team at Planet Money pointed out that, in general, groupon keeps about half of what money they do collect. There is negotiation involved and Groupon tries to make the most astounding deal possible. She obviously failed at using any negotiation skills. If she offered her cupcakes at a 75% discount 26*(1-0.75) she was only pocketing around 3.25 after groupon took its cut. The Planet Money story is actually a really interesting discussion on price discrimination and the origins of couponing in general. http://www.npr.org/blogs/money/2011/04/08/135244697/groupons-secret-everybody-has-their-price
Any offers like that need to be limited to a certain number in the small print..
Isn't the point of groupon to get repeat customers by getting a crazy number of other customers in the door using some crazy offer? :)
And how much publicity is she getting for free from this?
Just sayin
You forgot to mention the thousands of kittens they kill each year to make them, too...
Then again, that's a positive.
I bought a piece of Orea Dream Cake from Deli Deluca in Oslo, Norway last night and it was $10. That's a little high, but pretty reasonable based on the fact that a dozen eggs here costs $8.
In this case, the fools being the ones paying £26 for a dozen cakes. But then again, they're idiots who haven't got out of London, so they're probably not worth worrying about.
Birds are not dinosaur descendants;birds are dinosaurs, for all useful meanings of "birds", "are" and "dinosaurs"
"You're really paying for the ability to buy your way out of having to actually bake without the social stigma of being too cheap/lazy."
I agree, there is some social factor most people have to take into account (the lazy/cheap) argument. But you would be stupid to buy the 'same' cakes for 30 dollars more, just because you have shitty crappy asocial friends who will judge you on the cakes you buy and how expensive those are. That are the same kind of people who think that higher payed jobs are better jobs and also a bigger car makes you richer.
Bleh
Man, a million doesn't stretch as far as it used too...
The point wasn't to get to be a 'super rich multi-millionaire'. The point was to have money to retire on. In many cases, if people invested their money instead of buying lotto tickets, they'd have a pretty decent retirement. And, as Tyler mentioned - the marginal utility/'happiness' of a dollar does decrease the more you have. Money, after a certain point, doesn't buy happiness.
Back on lotto winners - there's plenty of evidence that most lotto winner's money skills are worse than average, given that the majority of multi-million winners end up declaring bankruptcy within 5 years of winning, and by 7-10 years most are back in the same financial situation as they were before winning.
I don't read AC A human right
For that price they better be "special" cupcakes
Heck my pantry is chock full of store-brand stuff because that's pretty much all I buy. For the most part it all tastes pretty darned close to each other.
I'm with you here. Some store brand stuff isn't very good, but at least try it to find out. It's usually so inexpensive it doesn't matter. And those shopper cards. It's a whole new game for me. Nothing even gets in the cart that isn't on sale. Not on sale means I find an equivalent and is on sale or I skip it that week. I don't have the time or desire to extreme coupon, but it is a fun game to see how much I can save on a single $100 grocery store trip. So far my best has been $42 + the 2% cash back from the AMEX :)