Groupon Advice To Merchants

Written by Steve on November 30, 2011

A digital enterprise which enjoyed Wall Street petting, suddenly brandished as the skintest multi-billion generating company in existence, Groupon is almost celebrity with its turbulent media coverage featuring merchants going bust, Watchdog reports hitting The Mail, Business Insider running articles such as The truth about the world’s most controversial company, heaps of scepticism and damning reports about its ever-decreasing stock shares and countless forums pumped with complaints about misinformation and crafty small print. Horror and pandemonium aside, Groupon is still in business and the British public still seem bang up for a bargain.  But for anyone considering setting up a deal for the first time with Groupon, I’d like to share some very honest, non-jargon advice/views based on my recent experiences of working with Groupon on behalf of a client.

Groupon Pic

1. BE HIGH MAINTENANCE
Financial reward and brand awareness can be achieved both for Merchants and Groupon alike, but there is plenty of opportunity for error unless you approach the operation with the mentality that everything could go wrong unless you morph into a militant jobsworth suffering from OCD.

2. SORT YOUR PROFIT MARGINS, STOCK & SHIPPING
If you’re going to sell around 1000 units at a profit margin of £10, that’s a nice 10k in your back pocket – but only if that profit is calculated AFTER Groupon’s cut and shipping costs have been covered. Some merchants find themselves losing money on every item sold, which clearly can only be described as an epic fail to the maxarama. I’m no billionaire business mogul, but it’s a no-brainer that a small profit is fine if you’re selling high volume, and larger profit is needed if your product is more niche. Ultimately, don’t get rushed into agreeing any terms or percentages with Groupon. Respectfully, they are sales people who want to make as much money as possible from each deal, just like you – so get your negotiating hat on and take your time working out what will be financially viable to you, taking into consideration that the deal could be a huge success or generate little interest. Also, ensure you have everything set up with your supplier in advance to avoid any stock issues. Once customers redeem their vouchers they’ll be expecting to receive goods within the delivery terms stated. Sort out your stock, profit margins, shipping methods and terms in advance of even picking up the phone to Groupon, it’ll stand you in good stead.

3.SET UP THE DEAL PROPERLY
Consumers will be reasonable if you uphold promises communicated to them. Meticulously copywrite terms & conditions which manage customers’ expectations, don’t rely on Groupon to produce a contract which is accurate based on what’s been ‘mutually agreed’ over the telephone. They are usually working to a template; go through your contract with Groupon with a fine toothcomb. Also vital is to thoroughly go through the Ts&Cs Groupon provide to the customer – the slightest human error such as a typo could mean hundreds of customers being sent to the wrong URL to redeem their voucher, or for example, customers thinking they can order from your website when the orders will actually be done by phone. It is your responsibility as a retailer to make sure every step of the purchasing and delivery process is correct, after all it is you who knows your business inside out, not Groupon – and once you’ve signed that contract, all liability lies with you, nobody else.

4. WORK YOUR MAIN IMAGE – IT”S NOT JUST A PIC
Your chosen product needs to be presented in the best light possible, but without false advertising. Studio photography, edited and cropped professionally is perfect, but to reduce volume of complaints or returns it’s best to represent the product as realistically as possible.

Lether

Also try and give your product as neutral backdrop as possible, this can sometimes be out of your control if you’re working with stock photography – but be aware that products shown ‘in situ’ (such as a mattress in a bedroom or sofa in a lounge) have the potential to eliminate different markets. E.g. a young couple will be instantly put off by any image featuring brass ornaments or flowery carpets in a living room and click to the next deal, whereas the white sofa featured in the same picture may have appealed to them had it been in a more neutral setting.

5. COPYWRITING CAN MAKE OR BREAK SALES
Groupon have a house style applied to each and every deal featured on their site. What is requested from the merchant is a product description and some blurb about the company, Groupon write the introduction copy and a bit of a creative sell at the end normally. Be aware that this allows rooms for misinterpretation. For example, you may be selling a luxury 2000 pocket-sprung mattress, and a copywriter will take this information and produce a sentence such as ‘this incredibly springy mattress is…’ which conjures images of hundreds of springs sticking out after 2months i.e. not good.

Important to get your facts straight and remember this is space for the big sell! Although Groupon need the contract signed before their copy is written (this doesn’t allow for any authority on copy approval before you sign on the dotted line!), Groupon are accommodating and if you request a change to their copy before the deal goes live, they will pass on requests to their copywriters. The key to working well with Groupon is not to leave everything until last minute. If your deal is going out at 4am on a Thursday morning, 5pm on the Wednesday is not the time for amends to the copy.

6. BEWARE OF ANY ‘LAST MINUTE!’ OPPORTUNITIES
Sometimes companies drop out of running Groupon deals at last minute before signing on the dotted line, other times Groupon may be struggling to find a product worthy of a national deal. Either way, if you find yourself being asked by Groupon to step in last minute to set up a deal, be aware that you’re reducing the amount of time allowed for yourself and Groupon to go through the logistics and get it all right. Yes, it’s tempting, the prospect of earning thousands of pounds profit overnight, but if the deal isn’t set up with precision (which takes time and consideration) you may find yourself dealing with a sh*t storm afterwards. This could come as a result of a number of things, from misinformation about the product, problems with your supplier, errors in the Ts&Cs, the list goes on…

7. MAXIMISE MEGA TRAFFIC TO YOUR SITE – WOOHOO!
As financially rewarding as direct purchases through Groupon can be (if set up properly), a secondary benefit can, in my opinion, far outweigh revenue generated from deal sales – this benefit being masses of people checking out your website.

Stats

To maximise potential traffic to your site, my advice is to simply feature your website address within the main image used. Whatever you do, only provide Groupon with the absolute final image that you want used in the deal – if they request “any pic, just so we can see the product” do not send it over, there is a risk that this may get used. Make sure that the image you provide is perfect, professional and has your website address featured visibly. Moreso, make sure your website looks stunning and its functionality faultless…

8. GET MORE SALES – NOT JUST GROUPON SALES
An independent business that normally trades offline could see their traffic go up in the thousands from a single email campaign. Why not recognise this as an opportunity to really showcase your services/offers/prices… the product or service featuring on the Groupon deal may not be quite right for a customer, but if they visit your website for consideration, you have a secondary sales opportunity, which arguably could be as effective as the Groupon deal, bearing in mind that any sales generated outside Groupon will have an increase in profit margin now Groupon aren’t taking a hefty cut.

9. SORT YOUR SYSTEMS OUT
Once your deal has run and all purchases have been made, Groupon provide you with an excel sheet documenting orders. This details the customers’ data, which for example could include name, address, tel, product ordered, size, colour – all pretty straight forward, yeh? Not if you’re using a third parties for stock and shipping and don’t have a simple and effective administrative system in place. All it may take is 12 orders getting mixed up but before you know it you’ll have irate or confused customers on the phone, emails, notes and a neglected spreadsheet, a factory with 12 products ready to be shipped but in the wrong size or colour, and a shipping company with the wrong delivery details – and no way of tracing back which orders are intended for particular customers or which 12 customers in your spreadsheet those products belong to. You may assume that this is basic stuff, but I can’t stress enough the importance of having one person who controls all incoming orders, passes them on for shipment (with a reference number) and marks them off once shipped – with all information being channelled in to one mother excel sheet. Any queries or customer complaints/issues should also be logged on this mother excel sheet. If you don’t have the in-house resource to do this, hire a virtual PA or a temp who’s obsessed with organising stuff and setting up excel sheets, dish out your £700 for 2 weeks admin support, for the time it’ll save you in refunds and complaints or time wasted trying to sort out any mess, that £700 will be well worth it – and if you’ve made 15k profit in a single deal then it’s just common sense to budget for the support to ensure that profit stays high and doesn’t get massively dented with exchanges or refunds.

Cupcakes

10. DON’T BE THICK
So yes, we’ve all gasped and relished in tragic stories such as that of the cake maker who almost went bust after Groupon bargain hunters ordered 102,000 cupcakes – but there is a simple solution to this, when discussing your product/discount and deliverable with your account manager at Groupon (everyone gets one, they’re basically target-driven sales people who oversee everything) … limit the deals available to match the amount of product or service you are able to supply – it’s not rocket science. Groupon deals are what you make them, it’s up to you to set the rules but most importantly for you to adhere to them, and for this to happen takes pre-planning which is always better than dealing with an aftermath.

I look forward to running more deals for our clients, with the right planning and attitude, there is a lot of money to be made in the space of 24hrs… it just has to be executed properly.

Hope this has been of help on some level.
xx Jenni “I love Groupon & am not ashamed to say it” Davies