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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 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.
The point is that promoting your business via Groupon is very often a big mistake, unless you have a lot of perishable unsold inventory.
Selling via Groupon doesn't do much to build your business, since most Groupon buyers are cheap - instead of looking to become regular full-price customers, they will look for the next Groupon.
The customer is loyal to Groupon, not the businesses that sell via Groupon.
Yes, people are very bad a math.
As evidence I cite MegaMillions, Power Ball, and the continued existence of Vegas with its billion dollar hotel/casinos.
You don't understand that buying a lottery ticket is more than just owning an almost non-existent chance of winning enough money to actually change your life. It is the opportunity to spend a buck or two and 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. It's certainly better than spending that couple of bucks on some high fructose corn syrup favored carbonated water that's tough on your liver, metabolism, and overall health.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
you say that, yet we had people decide over the course of a couple years that a $0.50 cup of coffee was now worth $3.95. Of course they'll pay $5 for a cupcake.
Merchants simply fail to actually do so.
Not quite. The merchants that elect to set reasonable caps don't get their promo run. So you don't see them.
Groupon runs the deals that make them the most money.
If a cupcake business wants to run 200 coupons @ 75% off for $7where groupon takes half ($4.50) that's only $900 for groupon.
Groupon simply won't run that deal.
Groupon pushes hard for deals they damn well know don't make an ounce of sense for the business.
When I hire a contractor, or a consultant, or an ad agency... their job is fundamentally to come up with a good solution for the the business.
If a particular contractor consistently advises, even pushes businesses hard to make catastrophic decisions then they deserve some of the credit for those catastrophic decisions.
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
Just like a computer contains the same silicon and rare elements as any other computer, the devil is in how they're assembled and put together, and the skill with which someone makes them. A "working" program is made in exactly the same compiler with exactly the same syntactical constraints as a segfaulting program
http://www.donarmstrong.com
Exactly this. Except the $0.89 cup cake at my local grocer is made with mostly lard and sugar with waxy poor quality chocolate and lard icing and comes in maybe 3 different flavours and is sold in very high volumes at a low price.
Whereas the specialty cup cake is made with real butter high quality chocolate and other ingredients and is available in 20 different flavours and is sold in low volumes at a high price.
Basically think of Neapolitan ice cream from some big manufacturer vs Baskin Robins or some such. You can argue that they are overpriced for what they are but you can't say that the products are exactly the same.
One last point I'd like to make is that in some other countries in world, like France for example, specialty bakeries making high end pastries and cakes are the *only* types of bakeries. People are so willing to pay for higher quality food that there are no cheap grocery store alternatives. So maybe it's not a fad.