Shawn Shibe began the summer of 2011 with way too many clothes, boxes and boxes of clothes. As sales manager of , a full-service repair center and bike shop that sells both mountain and road bikes, gear and accessories, Shibe turned Groupon to help him move his excess products.
Launched in November 2008, Groupon features a daily deal on the best stuff to do, see, eat, and buy in 43 countries according to their website. Based in Chicago, Groupon sends personalized deals to users who can opt in to receive deals via email.
Groupon connects customers with businesses and their products and services that are closest to their exact zip code, and also based on their gender and shopping habits, wrote Groupon representative Kelsey O’Neill in an email.
Not About the Money
Tread Bikes offered 100 dollars worth of clothes for $50 and sold 410 Groupons.
Shibe explained that of the $50 that the customers spend, half goes to Groupon and half to the business. After credit card fees, Tread received about $23 for every Groupon they sold.
“I know selling something that costs $100 for $23 is really bad business, but I kind of looked beyond the initial thing and thought about, you know, the extra customers,” he said.
For Shibe, Groupon gave him a chance to bring in business. Almost 1,110 people visited Tread Bike’s website on the first day their Groupon ran, up from the usual 70 hits per day they were getting. According to Google, 92 percent of those people were unique visitors.
“The amount of exposure, you can’t really put a price on that,” he said. “A thousand people came to our site, but only 400 bought it. That’s very focused exposure.”
Photo Gallery Pioneer in Classes Groupon
When Groupon approached Aperture Academy owner Stephen Oachs in the summer of 2010, he couldn’t see figure out why it would beneficial to sell his products at such a steep discount.
After Aperture Academy’s first Groupon ran in January of 2011, Oachs had changed his mind. About 900 customers paid $65 for an introduction-to-photography workshop, a $135 value.
“It brought an influx of business we could have never gotten for our introduction to photography class,” he said.
In July, the gallery ran the same deal again. This time they sold 332.
Oachs partly attributes the lower sales to the influx of photography classes being offered in the daily deals market.
“We the first ones to have done a photo type class, “ he said. “We’re a little like pioneers in that area, and it’s a little frustrating being copied.”
The profit margin is tiny -- in reality the businesses are selling their products and services for 75 percent off, he said.
Oachs guesses about 75 percent of customers redeemed their Groupons from the first deal that was run, a number he hopes increases to 100.
“Classes are personable,” he said. “These Groupons have more value if they’re redeemed to me.”
Getting A Deal
The personalized, couponing site proactively reaches out to businesses, but businesses can also approach them.
“Groupon's dedicated team members canvas each market looking for the best local businesses to feature,” wrote O’Neill. “Similarly, businesses can reach out to Groupon by visiting GrouponWorks.com.”
Shibe says Tread’s four and one-half star rating on Yelp is what attached Groupn.
Using Groupon Smartly
The interest in Tread Bikes and the amount of people that their logo was put in front of sold the deal for Shibe, but he cautions other businesses to consider the logistics before they sign up.
“I’ve heard more bad stories than good,” he said.
Shibe has seen bikes shops that offer Groupons for tune-ups, but aren’t prepared for the business and completely book out their schedule. Customers walk away unhappy and businesses don’t win in that situation.
Similarly, Oachs noted that there is dichotomy between Groupons for products and for services.
“A discounted picture may not bring people back like classes,” he said.