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.
Apparently, people really love getting cupcakes cheap, because she was rushed by throngs of customers in a cupcake frenzy. 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 a ton for a small biz. It wiped out her profits for the year, reports the Daily Mail.
“Without doubt, it was my worst ever business decision,” she told the BBC. “We had thousands of orders pouring in that really we hadn’t expected to have. A much larger company would have difficulty coping.”
This is just the latest in Groupon small business horror stories. A story popped up in September about a Portland cafe losing $8,000 because of a Groupon, which prompted a personal letter from founder and CEO Andrew Mason.
It brings up the always-present question about the daily deals site: does Groupon suck for small businesses?
Well, it looks like most small businesses think so. An overwhelming majority of 70% hate Groupon, if the latest survey from iContact is to be believed.
As for Brown and her bakery, the experience may have cost her 20 grand, but what about all the exposure she’s getting for her store? Great, right? It doesn’t hurt, but it probably wasn’t worth the cost.
Small businesses like this bakery thrive on relationships with their local customers, not crowds of outsiders coming in to snatch up a free lunch.
Getting new customers is great, but in this case, the bakery rewarded the wrong customers. Those 8,500 people that rushed for the Groupon probably won’t be coming back to pay for the same cupcakes at quadruple the price.
Only those the store has nurtured relationships with for a long time (in Brown’s case, 25 years), should be the ones rewarded. They’re the ones that keep coming back for more.
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They don’t come as much of a surprise, but with all the talk of Android’s surging popularity and explosive app growth, Nielsen’s numbers do serve as a reminder that Apple still has a comfortable lead. Versus Android, that is—nationally, the iPhone’s still in second place, with a 28% market share compared to RIM’s 35% (Android has 9%; Windows Mobile has 19%).
But it will be interesting to see how things shake out over the course of the year. With the new iPhone dropping in a matter of weeks, prospective smart phone buyers (23% of U.S. mobile customers now have them) will be faced with the choice of hopping on the Apple wagon or exploring the multitude of Android options. As Matt noted in his Froyo review, Android is as polished as it’s ever been and is likely to improve even more in coming months. And while it’s hard to top the iPhone hype machine, reception to early versions of iPhone OS 4 hasn’t exactly been rapturous.
Another Nielsen graph shows that both platforms enjoy loyal users—80% of iPhone users want another iPhone; 70% of Android users want another Android phone—with Android’s group slightly more curious about the iPhone than the other way around. But in my experience, it seems like things are trending to the opposite. With Android’s app offerings increasingly matching up with the iPhone’s, I’m seeing more and more people considering Android a viable option for themselves, as well as one they can recommend to others.
Though still on top, Blackberry’s loyalty is only 47%, and as current Bold owner, I’m definitely of the 53% that’s planning on jumping ship when it comes time to buy my next phone. I’m just not sure what ship I want to jump into. [Nielsen via CNET]
To call Mark Cuban eccentric would be akin to describing the ocean as wet, but what’s not so often acknowledged about the Dallas Mavericks owner is the sharp mind and commercial nous that have gotten him to the position of hiring and firing millionaire ball players. One of Mark’s recent blog posts, entitled “The future of TV … is TV,” got the attention of NewTeeVee, who sought to debunk his contention that VOD (video on demand) services from cable operators would become the primary means by which we consume digital media in the future. They cite the growing success story of Netflix’s digital distribution model, as well as the 12 million hours of March Madness video consumed via CBS’ web portal, in arguing that web streaming is indeed the great new hotness.
Mark’s response tackles Netflix head on, and points out that the company’s rapid growth is about to start working against it, with movie studios and other content providers likely to jack up prices and demand further concessions from the streaming service as it turns into a real competitor to cable companies. According to him, Netflix is presently getting its content at prices that are unsustainable, and his prognostication is that content owners seeking bigger levies — together with the expansion of VOD choice, which he sees as foolproof compared to the overwhelming complexity that web streaming entails — will lead to Netflix passing costs on to the consumers and losing out to cable operators. Irrespective of whether you agree with him, the whole exchange is well worth a read. Use the links below to get filled in.
Mark Cuban foretells Netflix demise, sees a future filled with on-demand video originally appeared on Engadget on Fri, 07 May 2010 10:09:00 EST. Please see our terms for use of feeds.
Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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