Are Daily Deal sites like Groupon REALLY a bargain?
It has to be stated the rise of so many daily deal websites has proved both enjoyable for some and yet for many businesses a proven failure as a business model.
For the consumer having your hair done with 50% off or even up to 75% off surely has a great WOW appeal! However the reality is something quite different for ALL parties involved in this online transaction.
How does it Work exactly?
Many consumers are shocked when they find out how little the end business actually receives for the services rendered. Typically the break down shown below reveals just one recent hair offer-
Highlights including cut £100
“The Deal” – £25.00!!!
Yes 75% off (Actual cost for the consumer £25.00)
Groupon (for example) then take 50% of what is remaining. So they take £12.50
The Hair Salon then take their remaining 50% of what is left.
Yes the Hair Salon actually takes £12.50 for highlights and a cut!
Many salons would normally charge £100-00 for the same service!
Surely that’s Good for the bargain hunter-Isn’t it?
It might seem good when you enter your payment details and press the return button but for many who have then gone on to experience these ‘deals’ it’s a different story. To illustrate – How would you feel if you got to work tomorrow and your boss said “this week because we need more business instead of me paying you £10 per hour I am going to pay you £1.20. per hour” How motivated to work would you feel?
Though the illustration sounds preposterous, in essence this is pretty close to what is actually happening.
So if we would feel deflated and de-motivated by such a move why would anyone expect an excellent service when from the ‘get go’ the whole idea is flawed!
Sadly its been commented that many hair stylists hate groupon clients as they see them as the enemy when really the enemy is the company asking businesses to slash their service costs massively and then share what little profit is left.
Well it would seem with companies like Groupon who are experiencing record losses that maybe they wont be around much longer. Time will tell......