Clearly, the trending topic for the week has to be groupon and its stellar IPO in many levels. The IPO which opened at $20 saw shares rise by 35% to close at $27 on the first day of listing itself. This made a lot of people millionaires and justificably so because of their hard work.
The question that a lot of folks in India are still figuring out is whether a Group Buying site is indeed good for the retailers… To quote a retailer
As a retailer who has used Groupon — as well as traditional advertising — to build my business, I’ve come to the conclusion that there’s a lot of misinformation out there. Is Groupon the worst marketing ever? Or is it the best marketing ever? Probably both. One thing is for sure: Groupon is a beast. What else would you call something that can deliver 2,000 customers to your store? It’s a beast that can propel your business or smother it. It depends on your business. It also depends on you.
Now what will it depend on in the Indian Context –
Primarily 3 factors:
1. Nature of your business and local factors – such as sector of operation , perception on discounts etc
2. Brand sensitivity – will offering a discount dent the brand in the eyes of your regular customers? It is a judgment call. I am sure that it is a bad idea in some cases.
3. Pure economics – Is the LTV of the customer good enough ? Can your giving discount to the customer the first time around help you build lasting relations with these new folks who came by to your place?
4. Average sale amount – Is the average sale amount high enough? Does the customer also buy stuff that was not included in the deal too?
Let us know your views on this.