Four Months is Up

28 Feb

So, how did it go?  Are you guys laughing at me or laughing with me?

If you haven’t been following, I’ll give you the scoop.  We partnered with Groupon in offering a coupon for $20 worth of product, for which the customer only paid $9.  The offer went out on October 7th – for only one day – and 1450 were sold.  Honestly, we were overwhelmed by the response.  Being a small business, in an “out of the way” location like Sky Park Circle, we didn’t know if we would even get 3 or 4 hundred.  The tricky thing about Groupon customers, obviously not all, but some of them at least, are bargain hunters.  We had lots of our loyal customers purchase the Groupon as well, but there were also loads of new people who came through our orbit – between October  and February – some who seemed to know what to expect when they walked in and others that were surprised or confused.  Perhaps our wacky vibe jolted their expectations of donuts, bagels and other bakery staples.  Toward the date of the Groupon expiration, piles of customers called with “… so, I have this Groupon…”  Meanwhile, the staff and I were ordering extra butter and chocolate and turning out loads of tarts, croissants, marshmallows, etc.  Once we turned around, our baked goods and confections seemed to be gone in a flash.

So, the question is, how many new visitors – Groupon’ers – will become return customers?  And will the deep discount of all the product “sold” to the Groupon holders eventually be offset by return business of enough of those Groupon holders?  The deal with Groupon is probably not something that they want to be public knowledge, but the purchase price that the customer pays for the coupon is split equally by the company and Groupon – so for the customers $20 worth of product, the bakery received $4.50.  How does one calculate the metrics of the cost/benefit analysis on the Groupon equation?

We’ve heard rumors and murmurs of businesses, specifically restaurants, who have had negative consequences from offering a Groupon.  A recent example in the LA restaurant press is The Point, in Culver City.  I haven’t visited this place and have no knowledge of their menu, service, etc.  According to articles, the owner did not approve the deal and felt overrun by the Groupon customers, to the point that they stopped accepting the Groupon before the expiration date.  Remember, this is all 3rd hand knowledge, so who’s to say what happened behind the scenes?  I do see how restaurants with table service might have a problem with customers who tip on the discounted total – that would tend to generate animosity toward the Groupon customers in the eyes of the staff.

Just a quick rundown of our experience…. overall very good.  We met many new faces, who seemed genuinely happy to have heard about Blackmarket Bakery and be able to try our pastries at a discount.  I will report back in 6 to 8 months on the long term effects.  And I would love to hear any feedback you have on your experience with this phenomenon.  Many thanks and we hope you stop by (again)!

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3 Responses to “Four Months is Up”

  1. callmemochelle February 28, 2011 at 6:29 pm #

    I’m a loyal customer who also cashed in on groupon. You’ll see me again 🙂

  2. Greg! February 28, 2011 at 7:00 pm #

    Groupon, shmopon, I loaded up a big box of completely random stuff and dropped it off at my wife’s company (OCWEEKLY, hi Rachel!) for Valentine’s Day. Only heard good things back from her office. Office people “eating anything put in a break room” issues aside, everything was yummy and totally reasonable at regular price.

    Fair disclosure: Not 100% objective opinion, maybe 73%. It was my first time in the business, but my wife expressed her fandom of them when we reached their table at the aliens and monsters art show.

  3. todd. March 8, 2011 at 7:01 pm #

    I think the deal with groupon is relatively widely known. At least as far back as November, an NYT blog post said, “The members who buy the coupon get 50 to 70 percent off on a product or service, and Groupon splits the proceeds with the retailer — usually leaving the retailer with about 20 to 25 cents on the dollar of retail value.”

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