Shops grapple with fallout from group coupons
Chicago, IL —Local shops nationwide are pulling in thousands of new customers with group coupons online, but the deals can sometimes work too well, turning marketing into a game of retail roulette.
Some of the nail salons, restaurants and other small shops that have sold the coupons have risked both new and existing business as they struggled to handle the surge in clients.
For Crystal Nail Salon in Chicago, ratings at web sites like Yelp.com tumbled as owner Phu Bui struggled to serve up the 5,100 manicure-pedicure combinations he sold in June for 65 percent off.
“All of a sudden it went over the edge of my expectations, so I’m a little overwhelmed,” Bui says.
Chicago-based Groupon, credited with creating the group discount concept and still the ballooning trend’s leader, typically keeps half the coupon’s selling price and charges retailers a processing fee. It e-mails deals daily to 11 million shoppers in 150 cities in 19 countries and this month started tweeting about group deals to many millions more.
The messages, which cost retailers little up front, typically promote a service at a significant discount and require a minimum number of participants (the group) to take effect. Being available for only a day or two — and often to a limited number of people — gives them an added sense of urgency.
Bui — who bypassed Groupon’s recommendation to limit the number of $28 coupons — says he’ll consider offering an online deal again, even though some patrons complained of long waits, inadequate treatments and feeling rushed.
