![]() Most deals were offered in unlimited quantities, resulting in huge influxes of unprofitable new customers that merchants struggled to convert into repeat customers willing to pay full price. For restaurants, one of the most popular deal categories, merchants often ultimately sold meals far below cost. Customers often received products and services at a 50% discount with Groupon taking half of the balance as commission, leaving the merchant with only 25% of the full stated value. ![]() Groupon pushed merchants to offer steep discounts to ensure compelling deals. Groupon would generate margin by serving as the platform between local merchants and customers. Customers, on the other hand, gained access to compelling discounts and getting exposure to new products and services that they may not have been willing to purchase at full price. As companies evaluated against CPM rates for online marketing efforts, there was a strong appeal in Groupon’s proposition that merchants did not have to pay unless their offers generated sales. Merchants were able to access new customers without paying any marketing fees they’d see with other online and email marketing programs. Groupon was founded in 2008, offering online discounts for local businesses in the Chicago area.
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