Business Opportunities Weblog

Groupon Gone Wrong

By on November 25, 2011 in News

Some people see a mild success by offering Groupon deals. Some people lose thousands of dollars and nearly kill their business. Need a Cake in the UK falls into the second category.

Need a Cake bakery owner Rachel Brown decided to put up a 75% discount on a dozen cupcakes on the site, which dropped the price down to $10 from $40.

8,500 people signed up, and her crew of eight had to make 102,000 cupcakes to meet the orders.

Brown lost $3 per batch because she had to hire 25 extra workers to help, and she ended up losing $20,000 because of it, which is a ton for a small biz. It wiped out her profits for the year.

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Angela Shupe has added 5,783 posts to Business Opportunities Weblog.

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  • Lee Wharton

    She may have lost a lot of money but she gained a lot of potential new customers.

    It may be a blessing in disguise.

  • Eric

    Honestly, I blame her for not knowing her metrics, yeah, I feel bad fro her, but these types of stories have been out there for a while. Had she been priced at a rate that would have been profitable, even $1, she would have done almost 30% of her annual profit from that promo. Yes, I understand that Groupon does everything in it’s power to convince businesses to gut their prices and offer a great deal, but seriously, she could have worked that out.

    On a side note, how much press is she getting for this sob story? Will people also go there and buy because they feel bad for her? Just wondering ;)

  • http://wahm.business-opportunities.biz Angela Shupe

    I agree, a lack of information is what hurt the business. They lost a lot of money because they didn’t consider what they would need to make it work. Is there an option that would have allowed them to cap the number of discounts purchased? At such a steep discount, how much money will be lost/gained? Just how many orders could they handle? Etc. Doing a little research and determining just what was needed before using this form of “adverting” is important.

  • brownieheaven

    i agree with that !!

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