I don't know who this Rice guy is, or what research he did to support his claims, but I was shocked to see a post questioning the #groupon model without interviews from them, businesses using social coupons or someone with an idea of how social media is changing the world.
My limited knowledge of @Groupon is that it ROCKS. I've only talked to 4 of the businesses that I redeemed a coupon at, not much of a sample... but all four of them had more business AFTER the promotion.
The article claims that with half to 4/5's of businesses reporting profits from the promotion itself that Groupon model looks shaky.
Has anyone involved with this ever run a business?
I did ask one local business owner if he was going to use Groupon again. He said "I doubt it. The boost in word of mouth from this has made a permanent improvement in my business and I don't have the capacity"
What other promotion vehicle is doing that today?
"If things continue the way they are, I would be very surprised if it's sustainable," says Utpal Dholakia, an associate professor of management at Rice University, who led the study. He surveyed 150 businesses that had run promotions through Groupon between summer 2009 and summer 2010. Although the majority of Groupon's business customers said they were satisfied with their promotion, Dholakia found that about a third hadn't turned a profit as a result of offering a deal, and just under half said they would not repeat the experiment. He argues that the problems experienced by these firms mean that changes need to be made if such social promotions are going to survive in the long term.
Read more at www.technologyreview.com
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