Revision history  [back]

{'body_text': 'Imagine you\x92re a small business owner. You have to choose between two\r\npropositions:\r\n\r\n You can pay 62,500 for marketing. You\x92ll get a whole lot of\r\ncustomers coming through your door. No guarantees if they will ever\r\ncome back, but they\x92ll come once.\r\n I\x92ll pay you $21,000. You get $7,000 in about 5 days, another\r\n7,000 in 30 days and the remainder in 60 days. In exchange, you\x92ll\r\ngive my customers cheap products for the next year.\r\n\r\nI\x92ve been working on local for a long time and I know it\x92s hard to get\r\nsmall businesses to spend money on advertising. Really hard. Even\r\ngetting $200 a month ($2,400 a year) is a high hurdle to meet.\r\n\r\nThere\x92s no way a business will sign up for #1. Most merchants would\r\nlaugh you out of the store if you asked for 60,000.\r\n\r\nExcept they are. In droves.\r\n\r\nAlthough they sound completely different, #1 and #2 are really the\r\nsame\x97it\x92s the Groupon business model.\r\n\r\nBusinesses are being sold incredibly expensive advertising campaigns\r\nthat are disguised as \x93no risk\x94 ways to acquire new customers. In\r\nreality, there\x92s a lot of risk. With a newspaper ad, the maximum you\r\ncan lose is the amount you paid for the ad. With Groupon, your\r\npotential losses can increase with every Groupon customer who walks\r\nthrough the door and put the existence of your business at risk.\r\n\r\nGroupon is not an Internet marketing business so much as it is the\r\nequivalent of a loan sharking business. The $21,000 that the business\r\nin this example gets for running a Groupon is essentially a very, very\r\nexpensive loan. They get the cash up front, but pay for it with deep\r\ndiscounts over time. (This post applies to Groupon operations in the\r\nUnited States and Canada; it\x92s different in other parts of the world.)\r\n\r\nIn many cases, running a Groupon can be a terrible financial decision\r\nfor merchants. Groupon\x92s financials also raise questions about its\r\nongoing viability. Buying Groupon stock could be as bad a deal for\r\ninvestors as running a Groupon offer is for merchants. This is my\r\nopinion, but I have some facts to back it up.\r\n', 'sender': 'peter peter@gmail.com', 'subject': '[tag, tag2] test test'}