Groupon Merchant for Small Business Owners

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Groupon Merchant for Small Business Owners

If you’re a small business that offers physical products or services, Groupon Merchant may be for you. We’ve researched some of the pros and cons of Groupon Merchant for Small Business owners.

Groupon merchant advantages

It goes without saying that the Groupon concept is a hit with many. Customers love it because it gives them a deal. In fact, most Groupon deals give customers a 50% discount. The incentive is so good, it entices new customers to try your product for the first time.

Becoming a Groupon merchant also doesn’t cost anything up front. Signing up is free. Once your campaign has ended, Groupon sends you a cheque. All you have to do is fulfill the orders.

What are the downsides?

It mainly comes down to cost. The average Groupon deal gives customers a 50% discount on your products or services. Groupon then takes a 50% cut of that. Depending on your average profit margins, most small business owners take a loss on their Groupon sales.

So why become a Groupon merchant at all?

You need to think of your Groupon deal as any other marketing campaign. Only, instead of paying for advertising up front, you pay for the loss you take on each discounted purchase.

Depending on the nature of your business, you may be able to recoup these costs by upselling to your Groupon customers. For example, if you run a restaurant, happy customers might spend more than the cost of the Groupon. In this case, you would get to keep 100% of any additional sales.

Groupon merchant cons for small business owners

The concept of the daily deal has been around for close to 10 years now, and there are visible trends. In fact, not everyone has been happy with their Groupon merchant experience.

A common complaint is that Groupon customers are notorious for being cheap. Many of them are more interested in the deal; they don’t really care about the product itself. These customers usually don’t spend any extra money, and they rarely give you any repeat business.

Another problem is that Groupon campaigns are annoying for your existing customers. They might wonder why new customers are getting a deal, while they aren’t being rewarded for their loyalty. As a result, they might decide to shop with one of your competitors. And there’s nothing stopping them from buying a bunch of Groupons, which would leave you at a loss for their business, which you already had.

What are some alternatives becoming a Groupon merchant?

If you’re a small business owner who’s looking for new ways to advertise, there are a number of options for you to consider. Among others, you might try:

Pay per click search engine advertising

Pay-per-click ads can turn a person’s basic use of a search engine into powerful marketing for your business. The most popular forms of pay-per-click advertising are Google Adwords and Bing Ads. The traffic these sites are able to provide is practically unlimited.

Direct mail

People spend so much time online that physical objects are making a greater impact. This is where direct mail comes in. You can buy direct mail campaigns through organizations like Canada Post. This service requires you to pay money up front, but you’ll get to keep 100% of the money earned from sales as a result of your campaign.

Facebook ads

Facebook ads are pay-per-click ads that you can easily change up and tailor to your audience. Virtually everyone who’s on Facebook sees them, and you can target your ads to the demographics of your choice. They aren’t that expensive, either.

Other daily deal sites

Yes, it’s true! Groupon is not the only daily deal site out there. In Canada, you can also try LivingSocial, WagJag, and Buytopia. Quebec residents should also look into Tuango, which focuses on deals in La Belle Province. All of these daily deal companies are in direct competition with Groupon. As a result, they may be open to offering fairer compensation.

If you decide to launch a daily deal campaign for your small business, don’t be afraid to negotiate your terms. Whether you decide to work with Groupon or with anybody else, these deals can’t exist without you. Your campaign shouldn’t hurt your business!

Victoria Morrison

Victoria Morrison is a freelance translator, editor and small business owner from Montreal, Canada. You can find out more about her work at VictoriaMorrison.ca

MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.

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