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Baker Has to Make 102,000 Cupcakes For Grouponers

samzenpus posted more than 2 years ago | from the be-careful-what-you-wish-for dept.

Advertising 611

Rachel Brown, owner of the small Need a Cake bakery, became a victim of the old adage, "Be careful what you wish for. You might just get it." More than 8,500 people took Rachel up on her Groupon offer of a 75% discount on a dozen cupcakes, forcing her to make over 100,000 cupcakes to fill all the orders. In the end Brown lost almost $20k. "We take pride in making cakes of exceptional quality but I had to bring in agency staff on top of my usual staff, who had nowhere near the same skills. I was very worried about standards dropping and hated the thought of letting anybody down. My poor staff were having to slog away at all hours — one of them even came in at 3 a.m. because she couldn't sleep for worry," she told The Telegraph. "We are still working to make up the lost money and will not be doing this again."

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611 comments

The Law of Unintended Consequences... (5, Insightful)

CanHasDIY (1672858) | more than 2 years ago | (#38137452)

The 'Law of Unintended Consequences' strikes again!

75% off is a seriously deep discount, what did she expect would happen?

Re:The Law of Unintended Consequences... (1, Interesting)

Surt (22457) | more than 2 years ago | (#38137576)

She must have had some pretty serious margins to only lose $20k on a 75% discount after paying for extra staff.

Re:The Law of Unintended Consequences... (5, Informative)

Anonymous Coward | more than 2 years ago | (#38137774)

Nowhere in TFA does it actually say she lost $20k, and in fact the article is from The Telegraph and the business is based in London, so all currency in TFA is in pounds. In fact it says she lost between £2.50 and £3 per batch, which means she lost between £21,250 and £25,500, which would mean she lost close to $40k. More relevant to your comment, she lost £2.50 and £3 per batch selling at £6.50, so it costs her a little over £9 to make a dozen cupcakes which she normally sells for £26, so yes, she has some healthy margins, although not totally unreasonable for food products where you have an awful lot of waste (anything you don't sell by the end of the day is trash). Though I also don't really understand who the hell pays £26 for a dozen cupcakes.

You'll pay £3 at a supermarket (0)

Anonymous Coward | more than 2 years ago | (#38137994)

You'll pay £3 at a supermarket for a cupcake.

expensive cupcakes (3, Interesting)

MasaMuneCyrus (779918) | more than 2 years ago | (#38138022)

£26 per bakers dozen cupcakes!? Is this a normal price? That's $40! Are these normal prices in London?!

Re:expensive cupcakes (4, Informative)

spire3661 (1038968) | more than 2 years ago | (#38138088)

Its this new metropolitan area fad of upscale cupcake stores. Ive had a few 'gourmet' cupcakes from one in Laguna Beach. It was ok, but not worth the $4 i paid for it and I'd never go back.

Re:expensive cupcakes (4, Insightful)

AngryDeuce (2205124) | more than 2 years ago | (#38138096)

Two pounds a piece? Four dollars a cupcake??

Jesus Christ, do people really have that kind of disposable cash laying around these days? They'd better be some life-altering cupcakes for that price.

Re:expensive cupcakes (4, Funny)

X0563511 (793323) | more than 2 years ago | (#38138268)

Yea, I was thinking the same thing.

Oh look, Italy is out of money! (continues eating $5 cupcakes)

Re:expensive cupcakes (0)

Anonymous Coward | more than 2 years ago | (#38138104)

Erm... Yes. Your problem that the $ is such a weak currency.

Re:expensive cupcakes (3, Informative)

Anonymous Coward | more than 2 years ago | (#38138144)

That's a normal price anywhere for high-end premium cupcakes. These aren't the dry little half-frosted cupcakes you remember from elementary school, these are basically scaled-down high-end wedding cakes that sell for $3-6 each individually, with a small volume discount. It's a trend that started with the Magnolia Bakery in New York City and went nationwide when the characters on HBO's "Sex in The City" raved about Magnolia. Every decent-size city in America has several cupcake shops these days, it's hard to throw a rock without hitting one. I can't believe you haven't seen them.

Re:The Law of Unintended Consequences... (1)

timbo234 (833667) | more than 2 years ago | (#38138174)

Super expensive 'gourmet' cup cake bakeries are a fad right now in London, that's how she can get away with 26 quid for a dozen.

Re:The Law of Unintended Consequences... (1)

Anonymous Coward | more than 2 years ago | (#38138226)

A ton of these have sprung up in the Washington DC area. My girlfriend heard about this great cupcake place and wanted to check it out. So we went. It's very upscale. I was shocked at both the fact that it existed and that it was so expensive. I then found out there were a bunch of other places just like it.

Actually, when I was in New York two months ago, we passed by one that was selling miniature cupcakes.

From what I can tell it's some kind of current trend / fad. It doesn't make sense to me since I can bake a dozen of these things for $2-$3, but they seem to be getting enough business to support multiple of this type of store in the same area.

Re:The Law of Unintended Consequences... (0)

Anonymous Coward | more than 2 years ago | (#38137788)

Some one at Goupon must have sold her a "bill of goods".
75% discount must be below her cost of goods sold.

Why would anyone do that ??

Would you discount your labor by 75% ??

Re:The Law of Unintended Consequences... (1)

Enry (630) | more than 2 years ago | (#38138156)

You'd hope for increased business. Think of it as a promotion or loss leader to get people in the door.

Re:The Law of Unintended Consequences... (3, Informative)

The Pirou (1551493) | more than 2 years ago | (#38137790)

Most baking is on a very low margin because of the bulk batches made by the Baker. Bread, Doughnuts, Pastries, and such can all be under 6% even utilizing 'expensive' ingredients like nuts and fruit. It's laborious, but only requires a few people to have any actual skill depending on the situation because of easy recipes.

I'm surprised she didn't approach a local culinary school if her cupcakes took such skill to prepare and create.

Re:The Law of Unintended Consequences... (4, Informative)

Dr. Manhattan (29720) | more than 2 years ago | (#38138072)

Most baking is on a very low margin because of the bulk batches made by the Baker.

Well, for chain stores, sure. My wife runs a bakery [sorellashomemade.com] - specialty cake shop - and margins have to be higher because of specialized ingredients, lower volume, personalized decorating, and so forth. It tastes a lot better than the bulk-produced stuff you get at Costco or Sam's or even the grocery story, but it costs noticeably more, too.

Re:The Law of Unintended Consequences... (1)

rickb928 (945187) | more than 2 years ago | (#38138128)

Don't forget Groupon gets a cut of this. And it ain't 25%.

local culinary school? Maybe if she had more time (1)

Firethorn (177587) | more than 2 years ago | (#38138188)

She probably didn't have time to think of approaching a school for work; a temp agency can have workers there in an hour.

The real WTF of this is her not putting a limit on the number of orders possible. That is possible, right?

Re:The Law of Unintended Consequences... (1)

LibRT (1966204) | more than 2 years ago | (#38138222)

You're right: she lost just $0.20 per cupcake at a 75% discount. So if the normal price of her cupcakes is $1/each, her gross margin is 55%, and if the normal price is $2/each, it's 65%. But I don't think anyone's getting rich making cupcakes - haven't heard of any "cupcake billionaires".

Fuck. Now I have a craving for a cupcake...anyone have a groupon handy?

Re:The Law of Unintended Consequences... (0, Offtopic)

Anonymous Coward | more than 2 years ago | (#38137736)

Governments offer free benefits to immigrants and what do they expect?

They "expect" only the ones needing it the most or the "hard luck cases" will be the only ones taking the help...

Instead the ruthless amoral ones come in and take full advantage while the ones actually needing the help who are good people who are too prideful to take the handouts.

So you end up with people immigrating to counties for the "welfare state" who don't even like the country and sometimes even loathe it, but do it for the freebies. And people wonder why Europe is becomming such a mess....

DUH!

Re:The Law of Unintended Consequences... (1)

Anonymous Coward | more than 2 years ago | (#38137780)

It was tough, but I just knew someone would find a way to insert a retarded political commentary into this story. Congratulations, AC! You are today's winner on "Who Wants To Be A Fucking Retard!"

Re:The Law of Unintended Consequences... (5, Funny)

JustOK (667959) | more than 2 years ago | (#38137760)

I don't think they understood what could happen when the passed that law.

Re:The Law of Unintended Consequences... (1)

couchslug (175151) | more than 2 years ago | (#38137952)

I smell bullshit. Given the markup on baked goods selling them at 25-percent of RETAIL should still make money.

Money "not made" /= "net loss".

Re:The Law of Unintended Consequences... (0)

Anonymous Coward | more than 2 years ago | (#38138080)

I smell bullshit. Given the markup on baked goods selling them at 25-percent of RETAIL should still make money.

Money "not made" /= "net loss".

groupon itself takes 50% of (discounted) revenue, so she would have seen 12.5%

Re:The Law of Unintended Consequences... (2)

Half-pint HAL (718102) | more than 2 years ago | (#38138138)

They're a direct-to-customer operation -- there's no wholesale step. It's not a fully automated industrial bakery, and that's part of their attraction to the clientele. The loss of efficiency is partly offset by the lack of middlemen.

And the moral of today's story is... (5, Insightful)

RogueyWon (735973) | more than 2 years ago | (#38137466)

... be careful about the special offers you advertise online. Groupon isn't at fault here - if anything, the complaint is that it did its job too well. If you put a sign in your window offering a special offer, you can take it down whenever you want. If you stick something out on the net, you need to be very sure that you can handle a bit of scaling around the response.

Still, full credit to the bakery for actually meeting the orders. I suspect lots of far larger retailers would have tried to weasel out of the deal they'd offered in a situation like that. And so far as I can see from TFA, nobody is talking about lawsuits.

Re:And the moral of today's story is... (1)

marcosdumay (620877) | more than 2 years ago | (#38137602)

There is some fault at Gropoun, they should have a way to limit the number of offers (unless they have, then the fault is doubly with the retailer).

But I bet that maker will get something in return for that sale, she's getting a lot of publicity.

Re:And the moral of today's story is... (4, Informative)

marcosdumay (620877) | more than 2 years ago | (#38137634)

Just replying to myself... Groupon does set that limit, and the fault is doubly with the retailer.

Re:And the moral of today's story is... (0)

Anonymous Coward | more than 2 years ago | (#38138158)

Fault can't be assigned so simply. What is Groupon's business? Who are its customers?

I believe that Groupon's business is advertising, and its customers are the businesses who sell the discounted offers. Groupon should be interested in helping these businesses advertise effectively. Any intelligent salesperson could have asked the question "How many of these offers are you capable of fulfilling?" and weighed the number of available coupons against this. This would allow for exposure for the business, discounts for Groupon buyers, and of course a cut for Groupon itself. Everyone wins. Everyone is happy.

A savvy business owner would have realized this without advice from Groupon, and the fact that this woman didn't implies that her business was destined to fail eventually anyway. But that does not change the way this story reveals Groupon's motivation: Groupon's primary motivation is not helping its customers, it is taking as much money from them as possible. Any business not organized around serving its customers will shortly find itself without any.

Re:And the moral of today's story is... (1)

sribe (304414) | more than 2 years ago | (#38137678)

There is some fault at Gropoun, they should have a way to limit the number of offers (unless they have, then the fault is doubly with the retailer).

Groupon absolutely does allow limits on offers. I know, because once or twice I've responded to an offer and the web page said "sold out".

Re:And the moral of today's story is... (2)

canajin56 (660655) | more than 2 years ago | (#38137794)

They do. You can limit them to X total coupons sold. You can also make them "one per customer" although customers will get violent if you try to enforce that just because it says so on the coupon.

Re:And the moral of today's story is... (5, Informative)

Anonymous Coward | more than 2 years ago | (#38137718)

Other sellers have reported that the Groupon salespeople do their very best to convince companies not to put any cap at all on the amount of product available, downplaying the probability of just something like this.

This is hence similar to a lender trying to get someone to maximise their borrowing. You could argue that the bakery as a company is a professional business and has no excuse - on the other hand you don't expect bakeries to be masters of internet marketing either. It would make you legally correct and a jerk.

Re:And the moral of today's story is... (1)

Anonymous Coward | more than 2 years ago | (#38137746)

...I suspect lots of far larger retailers would have tried to weasel out of the deal they'd offered in a situation like that...

AT&T had their online coupon for a free usb wifi card. So many people ordered it that they cancelled orders and didn't give it to many people. Props to Rachel Brown for holding a more respectable offer than AT&T could. :)

Re:And the moral of today's story is... (1)

AngryDeuce (2205124) | more than 2 years ago | (#38138020)

Well, when you're not a multinational conglomerate you don't have the luxury of pissing off tens of thousands of people like they can.

Hell, they don't even have to worry about Class Action Lawsuits anymore. [wikipedia.org] They might as well change their motto to "Take it or leave it, we really don't give a shit either way, we'll win in the end (TM)"

Re:And the moral of today's story is... (1)

angel'o'sphere (80593) | more than 2 years ago | (#38138004)

Did you ever try to put up your own deal with groupon? It has a super shitty user interface. That mistake could have happend to everyone ... and groupon is the only one making money on such mistakes.

Limits (4, Interesting)

heypete (60671) | more than 2 years ago | (#38137468)

I seem to recall reading that Groupon allows businesses to limit the number of offers available. That is, rather than having to deal with 8,500 orders, Ms. Brown could have limited the offer to 100 (or some other arbitrary number) people.

If my understanding is correct and such a system exists, it would be foolish for a business to not use it.

Re:Limits (0)

Anonymous Coward | more than 2 years ago | (#38137546)

I seem to recall reading that Groupon allows businesses to limit the number of offers available. That is, rather than having to deal with 8,500 orders, Ms. Brown could have limited the offer to 100 (or some other arbitrary number) people.

If my understanding is correct and such a system exists, it would be foolish for a business to not use it.

Is there a minimum that Groupon makes businesses sign up for?

Re:Limits (-1)

rickb928 (945187) | more than 2 years ago | (#38138284)

"Is there a minimum that Groupon makes businesses sign up for?"

Think about this for a moment...

If you're a multinational bakery, you can go crazy and sell a million sample cakes via Groupon, and you're thinking in terms of hundred-thousands.

If you're a local frozen yogurt shop, you're thinking in terms of dozens.

The scales are wildly different.

Asking the question "Is there a minimum that Groupon makes businesses sign up for?" implies either that:

- you think Groupon treats all businesses the same.
- you think Groupon doesn't treat all businesses the same.

If you think Groupon treats every business the same, well, you may be right, but this is highly doubtful. Remarkably so. For one thing, it is not just sensible that Groupon would want to know your typical volume just to spot the multinational and get them on to someone skilled in negiotiating such a deal, but there is little profit (or likelihood) in trying to get the fees from the yogurt shop if they happen to sell 100,000 Groupons. Not worth the effort of even letting them sign up for such a widespread campaign.

So, if you think Groupon doesn't treat all businesses the same, why did you ask the question?

Re:Limits (5, Informative)

Anonymous Coward | more than 2 years ago | (#38137554)

It's in groupon's interest to not let the client do that. They get vast sums of money from these "deals" and they know the system doesn't do the small business any good, because the couponers are pretty much all piss taking free loaders.

Re:Limits (2)

maeka (518272) | more than 2 years ago | (#38137706)

It's in groupon's interest to not let the client do that. They get vast sums of money from these "deals" and they know the system doesn't do the small business any good, because the couponers are pretty much all piss taking free loaders.

Not only does Groupon allow businesses to set a limit, it very clearly is in Groupon's best interest to do so.
If Groupon partners overextend themselves and deliver shitty service nobody will use Groupon.

Re:Limits (5, Interesting)

Loether (769074) | more than 2 years ago | (#38137872)

My wife uses Groupon all the time and so by extension I use Groupons. I hate them for precisely the GPs reason. Retailers ask if you are using a Groupon. If you say yes you almost always get substandard treatment/products. The companies who use Groupon overextend themselves and then hire temps or decrease quality to cover for their mistake. It's bad for businesses and bad for customers. The only one it's good for is Groupon.

Re:Limits (1)

Anonymous Coward | more than 2 years ago | (#38137628)

That's what I thought as well. Doesn't look like the Guardian did much research on this one...

Groupon Stores Merchant FAQ [groupon.com]

Re:Limits (1)

cluedweasel (832743) | more than 2 years ago | (#38138118)

Not quite sure why the Guardian would be doing any research on behalf of The Daily Torygraph.................

Stupid is as stupid does. (4, Insightful)

pyite (140350) | more than 2 years ago | (#38137472)

I may hate Groupon, but this person has no one to blame but herself. Do the math. If you sell that many coupons, even if only a fraction of them are redeemed, that's a lot of cupcakes.

Re:Stupid is as stupid does. (1, Troll)

timeOday (582209) | more than 2 years ago | (#38137740)

Your short post has a high percentage of "hate" and "stupid." Hey, she goofed up, it happens, even AT&T DDOS'd their own network with the iPhone. She wasn't being malicious, let's just learn something from her mistake and move on. A year from now she'll probably still be running her own small business and most of us will still be sniping at people on the Internet.

Re:Stupid is as stupid does. (0)

Anonymous Coward | more than 2 years ago | (#38137972)

Your short post has a high percentage of "hate" and "stupid." Hey, she goofed up, it happens, even AT&T DDOS'd their own network with the iPhone.

You ARE aware of the words used here on Slashdot to describe that exact scenario when it happened, right? Most of them were far, far stronger than "hate" and "stupid", they came in much higher percentages per post, and they were delivered in posts of all shapes, sizes, and lengths.

Re:Stupid is as stupid does. (5, Insightful)

Anonymous Coward | more than 2 years ago | (#38137838)

I may hate Groupon, but this person has no one to blame but herself. Do the math. If you sell that many coupons, even if only a fraction of them are redeemed, that's a lot of cupcakes.

The point is that promoting your business via Groupon is very often a big mistake, unless you have a lot of perishable unsold inventory.

Selling via Groupon doesn't do much to build your business, since most Groupon buyers are cheap - instead of looking to become regular full-price customers, they will look for the next Groupon.

The customer is loyal to Groupon, not the businesses that sell via Groupon.

GRPN trading for 20.05..... (-1)

Anonymous Coward | more than 2 years ago | (#38137478)

Is it too big to fail yet?

When will businesses realize (1)

Draconis183 (1871664) | more than 2 years ago | (#38137480)

That Groupon is not good business? Lets discount more than 50%, then pay a hefty commission on top of that.
Unfortunately these small businesses don't do the math and there are many stories like this.

Re:When will businesses realize (1)

Anonymous Coward | more than 2 years ago | (#38137580)

Groupon is great for business. Retarded small business owners not putting limits on their groupons are bad for business. Besides, she loses 20k now. She will probably gain 10x that over the next few years through increased exposure. That's 8500 customers that possibly would have never known about her shop.

Re:When will businesses realize (0)

Anonymous Coward | more than 2 years ago | (#38137640)

Do you get extra cheap coupons or just plain salary at the Groupon PR department?

Re:When will businesses realize (5, Informative)

spire3661 (1038968) | more than 2 years ago | (#38137656)

The conversion rate for grouponers is abysmal. They are locusts out swarming for the next deal.

Re:When will businesses realize (2)

CubicleView (910143) | more than 2 years ago | (#38137956)

I think it must really depend on the deal being offered. Groupon were spamming me every day about some (expired :S) mattress deal recently. I can’t imagine that offer would lead to much repeat business from a typical /. user, since they don’t tend to wear a matress out that quickly... However I did find a nice restaurant recently because of a discount I purchased from a different company, and I would definitely consider eating there again even without the discount. The same could be true of these cupcakes, if they’re good value without the discount, it should definitely lead to new business, just maybe not 20Ks worth...

Just 102k? (5, Funny)

DWMorse (1816016) | more than 2 years ago | (#38137482)

I'm sure she can do it. It'll be a piece of cake. 102,000 pieces.

Re:Just 102k? (0)

Anonymous Coward | more than 2 years ago | (#38138050)

I'm sure she can do it. It'll be a piece of cake. 102,000 pieces.

All you have to do is take a ton of flour, add it to the mix!
Now back up the truck with something sweet, not sour, a pound of salt, just a pinch!
Baking these treats is such a cinch, add a gallon of vanilla!
If there's a demand you bake a hundred grand, but ya never get your filla'...
Cupcakes! [youtube.com] So sweet and tasty!
Cupcakes! [youtube.com] Don't be too hasty!
Cupcakes! [youtube.com] (Customers poop on!)
Cupcakes! [youtube.com] (Bankrupt by Groupon!)

Cupcakes! [youtube.com] Cupcakes [youtube.com] cupcakes [youtube.com] cupcaaaaaaakes! [youtube.com]

(Now aren't you glad this is a Groupon thread and not an Apple [youtube.com] thread? :)

Geez... (4, Informative)

Ron Harwood (136613) | more than 2 years ago | (#38137494)

Are people bad at math or something?

From their FAQ:

Can I set limits on my deals?

Yes. You can limit the total number of purchasers. You can also set restrictions on how customers use the deal. For example, if you're a restaurant you can limit the use of Groupons per table or per order.

Re:Geez... (4, Insightful)

Fujisawa Sensei (207127) | more than 2 years ago | (#38137626)

Yes, people are very bad a math.

As evidence I cite MegaMillions, Power Ball, and the continued existence of Vegas with its billion dollar hotel/casinos.

Re:Geez... (3, Insightful)

MozeeToby (1163751) | more than 2 years ago | (#38137726)

Math and lotteries only don't work out if you base your math on the idea that $100,000,000 is worth 100,000,000 x $1. It is not. Above a certain number, large sums of money become "anything I want and never have to work again" which people value at much more than 100,000,000 times "a cheap cup of coffee".

Re:Geez... (4, Informative)

Tyler Eaves (344284) | more than 2 years ago | (#38137990)

Actually, you've got it exactly backwards. Marginal utility of each additional $ goes DOWN as the amount goes up.

Look at it this way - Say I give you $1,000,000. For most people, this is absolutely life changing - pay the house off, do what you want for a few years, generally be secure. Now say let's flip a coin, double or nothing. Unless you are already quite rich, you should NEVER take that bet - $2m would be nicer, sure, but compared to the difference between $1m and $0, it's no where close to being twice as good.

If the amounts go up a lot - to Bill Gates $1m would be essentially meaningless.

Re:Geez... (3, Interesting)

Fujisawa Sensei (207127) | more than 2 years ago | (#38138152)

The math for the odds of winning powerball are 1 in a hundred million. (1 in a hundred M, 1 in 130 M, 1 in 200M same difference, roughly. ) and each dollar you spend increases those odds to $x in 100 million.

According to today's XKCD you need to have over 4 million in investments, which mean that the only prize that really counts for never having to work again is the big one.

So your odds of winning and never having to work again are very small until you start spending millions of dollars on tickets.

Re:Geez... (1)

Megane (129182) | more than 2 years ago | (#38138180)

Math and lotteries only don't work out if you base your math on the idea that $100,000,000 is worth 100,000,000 x $1.

A lot of math doesn't work if you make it up from gut instinct, and completely ignore that the $100,000,000 is effectively $100,000,000 x .000000005. IIRC, the Texas Lottery has a 50/45/5 division of the money it takes in, with the 5% going to the retailer who sells the ticket, and 45% going to the state and the costs of running the lottery. So every dollar you put in gives you an effective payback of 50 cents. Some people happen to win big payouts, but it is intentionally a zero-sum situation, and most people won't even break even. For every million dollar winner, there are two million losers who lost their dollar.

To paraphrase WOPR, "The only way to win is to run the game."

Re:Geez... (3, Insightful)

Dog-Cow (21281) | more than 2 years ago | (#38137728)

A lot of people gamble for the fun of it, you know. There is value to the thrill of potential winnings, and that value may very well be greater than the dollar amount spent.

Granted, there are a lot of suckers too, especially in Vegas.

Re:Geez... (1)

jittles (1613415) | more than 2 years ago | (#38137738)

What do you mean? With odds of 1 in 250 million for winning powerball, I just have to buy 250 million tickets to win that 100 million jackpot!

Re:Geez... (5, Insightful)

Nom du Keyboard (633989) | more than 2 years ago | (#38138270)

Yes, people are very bad a math.

As evidence I cite MegaMillions, Power Ball, and the continued existence of Vegas with its billion dollar hotel/casinos.

You don't understand that buying a lottery ticket is more than just owning an almost non-existent chance of winning enough money to actually change your life. It is the opportunity to spend a buck or two and spend several very pleasant days fantasizing about what life would be like if you do win. Seen that way, it isn't a bad bargain at all. It's certainly better than spending that couple of bucks on some high fructose corn syrup favored carbonated water that's tough on your liver, metabolism, and overall health.

Re:Geez... (0)

Anonymous Coward | more than 2 years ago | (#38137924)

True, but it doesn't say what Groupon representatives say about this on the phone to the company.

doh! (3, Funny)

sgt scrub (869860) | more than 2 years ago | (#38137578)

Let them eat cupcake?

Why didn't she set a limit? (1)

Evro (18923) | more than 2 years ago | (#38137582)

Why didn't she simply limit the number of coupons that could be sold? I've seen other Groupons with limits. Sounds like she fucked up.

Re:Why didn't she set a limit? (1)

Maximum Prophet (716608) | more than 2 years ago | (#38138040)

According to the article, "Heather Dickinson, a Groupon spokeswoman, said there was no limit to the number of vouchers that could be sold. She said: “We approach each business with a tailored, individual approach based on the prior history of similar deals.” "

This is a tailored approach? Groupon seems to only get this kind a negative publicity. I can't see them as being a long term viable entity.

Very common (5, Informative)

tripleevenfall (1990004) | more than 2 years ago | (#38137584)

Stories in the press abound of small business retailers, particularly restaurants, living to regret making an offer on Groupon. These entities live on forming relationships with customers. Groupon brings in people who are only there to eat on the cheap and won't likely return.

Example story: http://posiescafe.com/wp/?p=316 [posiescafe.com]

"we met many, many terrible Groupon customers customers that didn’t follow the Groupon rules and used multiple Groupons for single transactions, and argued with you about it with disgusted looks on their faces, or who tipped based on what they owed (10% of $0 is zero dollars, so tossing in a dime was them being generous). "

Re:Very common (1)

Anonymous Coward | more than 2 years ago | (#38137712)

That's unfortunate, ever single groupon says something along the lines of "tip for the full amount of the bill", but it, like all tipping is just a suggestion. The kind of people who would leave a 0% tip because they got their meal for free are probably also the kind of people who would have left a 5% tip on whatever they did pay.

Groupon does not make shitty patrons, it does potentially bring shitty patrons to places they otherwise wouldn't have thought to go.

Re:Very common (1)

Anonymous Coward | more than 2 years ago | (#38137890)

To be fair, tipping can't be based on a percentage one time and then on some set amount another time.

In any case, tipping in America is bullshit and is out of control.

Re:Very common (1)

tripleevenfall (1990004) | more than 2 years ago | (#38138000)

I agree with this but directing one's ire at the waitstaff, who live on tips, instead of Groupon or a retailer is misplaced.

Re:Very common (0)

Anonymous Coward | more than 2 years ago | (#38138250)

And that, children, is why (true) communism will never ever ever work, because it relies on 100% of population having morals.

Bussiness 101 (1, Insightful)

Moheeheeko (1682914) | more than 2 years ago | (#38137586)

"For the first 100 people" would have been a good stipulation on that groupon. That would actually serve the purpose of the offer. The first 100 would get cheap cupcakes sure, but the following of people after the first 100 would likely buy cupcakes anyway without the coupon because of the "well, im here, might as well" attitude a lot of people have.

Re:Bussiness 101 (1)

residieu (577863) | more than 2 years ago | (#38137766)

No, the next 100 wouldn't buy cupcakes because they'd be pissed. They paid for a discount coupon, they're not going to buy cupcakes without it.

Re:Bussiness 101 (2)

Anonymous Coward | more than 2 years ago | (#38137798)

"For the first 100 people" would have been a good stipulation on that groupon. That would actually serve the purpose of the offer. The first 100 would get cheap cupcakes sure, but the following of people after the first 100 would likely buy cupcakes anyway without the coupon because of the "well, im here, might as well" attitude a lot of people have.

I don't think you understand how groupon works. They don't go in to the store to buy the coupon. Everyone who comes after the first 100/200/1000 would just be like "oh, i can't buy a coupon.. oh well, " and never think about the vendor again. and that's if they don't harbor some grudge.

- too lazy to sign in

Re:Bussiness 101 (2)

MozeeToby (1163751) | more than 2 years ago | (#38137806)

You should probably look up how Groupon (and the other coupon deal sites) work. Customers purchase a coupon from the Groupon website, which is then redeemed at the retailer or restaurant. So, if the deal is "$20 worth of steak for $10", the customer pays Groupon $10, prints out the coupon, goes to the market, and redeems the coupon for $20 worth of steak.

What you can do, is tell Groupon to only sell X number of coupons. But then, that doesn't drive customers to your store the way your thinking above does. People would simply go to Groupon, see that it's sold out, and never think about it again.

Re:Bussiness 101 (0)

Anonymous Coward | more than 2 years ago | (#38137998)

Why would you pay Groupon $10 to get $10 off $20?

She's doing it wrong. (4, Funny)

liquidweaver (1988660) | more than 2 years ago | (#38137614)

She should take a hint from KFC, not fulfill the promise, and just delay it in courts until it turns into a $3 coupon years later that requires OCD record keeping to capitalize on.

Oh wait, this is a small business, those don't hold voting rights in our corporatocracy.

Groupon sales rep (0)

Anonymous Coward | more than 2 years ago | (#38137674)

I wonder if the Groupon sales rep advised her to put a limit on the number of people that might take up the offer.

In fact, it is surprising that having a limit on the number of people that can take up the offer isn't the default. But wait ... the more people that take up the offer, the more money Groupon (and probably the sales rep) makes ...

Re:Groupon sales rep (1)

Shazback (1842686) | more than 2 years ago | (#38137918)

Pretty sure the Groupon sales rep didn't, and even discouraged her from taking up that option saying that if the deal was limited to too few customers they wouldn't run it.

Sadly, Groupon doesn't care about the businesses that run the deals. As they continue to burn through their goodwill, promising "exposure" to a "new audience" that never translates into long-term sales increases, they'll eventually find it harder to con businesses into stupid deals. About that time, their stock will tank and they'll go bankrupt, exposing them for the Ponzi scheme they are.

She protests too much (0)

bugs2squash (1132591) | more than 2 years ago | (#38137716)

even with the discount it's $10 for 13 cakes that have a total ingredient cost of, I would guess, less than a couple of dollars. It seems like she should be able to make money on a deal like that, especially as she does not have to worry about the cakes going stale waiting for a sale. Also, she now has reached 8500 new customers, which was presumably the point of the whole thing. I suspect her business mistake is going into a venture where you have to sell a $2 cupcake, even when made in bulk, just to break even.

Re:She protests too much (0)

Anonymous Coward | more than 2 years ago | (#38137842)

there is a lot more overhead than just the cost of ingredients. namely the cost of staff, utilities...etc.

that being said. groupon is such an obviously bad idea for small businesses to get involved in. people are cheap and if you give them a coupon they will flock towards the savings... but that's basically it. very few people think "wow what a cheap bunch of cupcakes, i'm going to buy a bunch of cookies with my savings!" they instead just take their cheap cupcakes and gtfo and instead of coming back they just follow the next cheap internet coupon.

Re:She protests too much (1)

kannibal_klown (531544) | more than 2 years ago | (#38137848)

even with the discount it's $10 for 13 cakes that have a total ingredient cost of, I would guess, less than a couple of dollars. It seems like she should be able to make money on a deal like that, especially as she does not have to worry about the cakes going stale waiting for a sale. Also, she now has reached 8500 new customers, which was presumably the point of the whole thing. I suspect her business mistake is going into a venture where you have to sell a $2 cupcake, even when made in bulk, just to break even.

- Plus cost of labor (perhaps overtime?)
- Plus cost of gas + electricity + whatever to continuously pump out a huge order
- Plus cost of shipping (or whatever)
- Plus the delay you'll face making your regular orders, which might lose you customers

There's more to a thing than the some of the components: whether it's a baked good's ingredients or a iPhone's transistors.

Re:She protests too much (1)

ledow (319597) | more than 2 years ago | (#38138200)

If you're not taking all that into account, per cake, when you make them and price them, then you're NOT doing business. You're playing at business. That's a sort of school-yard sale way of running a business - fine for entertainment and keeping you busy, worthless for a business that employs staff and has overheads.

And most of that stuff scales linearly or better (except possibly overtime, but then more staff would have counter-acted that presumably) - if the oven stays hot, it uses less gas per cake than if it keeps cooling, if you're making a thousand cakes you can bulk-buy the ingredients, etc. Worst that happens is some sort of physical limit (can't fit that many cakes in the oven, and not practical to buy a new oven for a one-off mistake) but she's already taking on extra staff to fulfil the orders so that's probably not the bottleneck.

Seriously, if you're not pricing your goods/services to make about 50% profit at least with EVERYTHING taken into account (i.e. down to the last pinch of sugar and kJ of gas), you're really not doing business so much as making a living for yourself (where profit is, basically, optional). In that case, you SHOULDN'T be using Groupon or even placing an advert without knowing that because you'll be expected to be a business when the new customers roll in.

The only problems I would see would be time (she's not complaining that she COULDN'T get them done in time, just that it was hard and she lost money), capacity (ovens, ingredients, working space, etc., none of which she really states as the reason she can't fulfil an order) and staff training (How long do you need to learn how to cook cupcakes en masse? A day? What effect does a production-line system where one person handles only one job have on your production that you couldn't do before?). But if you normally make a profit on the odd cupcake here and there, then you should make a LOT more profit on thousands of guaranteed orders with only the minimum of upheaval in comparison.

You can either whine about it, or get out in the van at 4am that day, bulk-buy the damn ingredients and draft in every relative and friend you have to help, and enjoy a percentage of 8,500 new, satisfied customers.

Unless, of course, you're really not that bright at this "making money" thing - and are stupid enough to give away a basically unlimited license to people to produce cake orders at a loss for yourself. I have about as much sympathy as I do when one of the big supermarkets has to cancel a special offer because they realise that customers can actually combine offers, take advantage, etc. and come out with profit at the store's expense. None.

Ignoring GroupOn (because the horror stories abound, and all of them are down to stupidity of these people when they deal with the GroupOn salesmen and sign the contract): If her CAKES were suddenly wonderful and popular overnight and people were queueing out the door for them (rather than just a special offer), she would have still made a loss. That's an idiotic way to run your business whether you ever expect it to happen or not. Every cake, promotional or not, should make a profit and NEVER a loss. Or your business is better off JUST NOT MAKING THEM even in small batches. If it doesn't scale, you're doing something wrong and failing to adjust to the situation - almost everything profitable scales nicely.

Re:She protests too much (1)

Mashiki (184564) | more than 2 years ago | (#38137878)

What I found funny was her selling a dozen cupcakes for $40. What? Huh? Holy shit, apparently I'm in the wrong market. I do some off time work at a friends bakery every few weeks, and she sells a dozen cupcakes in a variety of types for between $3 and 5.

I'm guessing these are luxury cupcakes, made from pickled droppings of some 30 year old bear.

Re:She protests too much (0)

Anonymous Coward | more than 2 years ago | (#38137962)

$3/cupcake is pretty normal. Possibly more if you want really fancy decorations (like for weddings, etc).

Also, I heartily laugh at these part time bakers. Poor lady had to come in at 3 a.m.. hah! My wife regularly starts bakes at midnight!

Re:She protests too much (1)

kramerd (1227006) | more than 2 years ago | (#38138122)

Its much closer to $50 a dozen. Depending on the exchange rate, somewhere between 48 and 56. ON the other ohand, with all of the taxes in the UK, along with the cost of retail space, it is entirely possible that a buck apiece is reasonable there, with a 4-10% profit margin.

Re:She protests too much (0)

Anonymous Coward | more than 2 years ago | (#38137948)

I think your business mistake is assuming she owns slaves and her ovens are fired by unicorn farts.

Re:She protests too much (1)

Nom du Keyboard (633989) | more than 2 years ago | (#38138130)

even with the discount it's $10 for 13 cakes that have a total ingredient cost of, I would guess, less than a couple of dollars. It seems like she should be able to make money on a deal like that, especially as she does not have to worry about the cakes going stale waiting for a sale. Also, she now has reached 8500 new customers, which was presumably the point of the whole thing. I suspect her business mistake is going into a venture where you have to sell a $2 cupcake, even when made in bulk, just to break even.

Or it could be the new business strategy:

1: Gain the notice of 8500 new customers with a major discount.
2: Gain the notice of everybody else with a news story about how screwed you were by GroupOn.
3: PROFIT!

Lucille Ball in the candy factory (0)

Anonymous Coward | more than 2 years ago | (#38137796)

I fully expect several Hollywood creative teams have jumped on this piece and are working on the 2011 version as we speak.

With the usual creative license, i.e. each Groupon order is individually printed from an inkjet printer perched on a rather high table so they can fall to the floor around the harried shopkeeper and bakers.

Groupon's fault (4, Insightful)

Maximum Prophet (716608) | more than 2 years ago | (#38137812)

I don't see how Groupon can be considered long term viable, if this is the kind of press they're getting. This lady will never be doing that again, and she's going to go to her local chamber of commerce meetings and say, "I had a bad experience with Groupon". Any salesperson from Groupon will have an uphill battle selling to anyone in that area again.

How hard would it be for Groupon to make the default limit be a small number? If the business selects a large number with a large discount, then their forms could ask, "Can you really service this number of customers over this time?"

I know it's easy to blame the baker for this mistake, it's not a viable business strategy to kill your customers. Customers are supposed to be bled slowly, so that you can bleed them some more tomorrow.

Re:Groupon's fault (1)

Anonymous Coward | more than 2 years ago | (#38138214)

Then again, a lot of people will hear about her store--and that she did her best to fulfill it.

Granted, the limit should have been placed.

Re:Groupon's fault (1)

Anonymous Coward | more than 2 years ago | (#38138238)

I don't see how Groupon can be considered long term viable

it isn't - their financials are said to be extremely sketchy and very "growth-oriented" (aka ponzi-esque)

Only The Latest GroupOn Horror Story (4, Insightful)

Nom du Keyboard (633989) | more than 2 years ago | (#38138058)

This is only the latest GroupOn horror story, and many of them probably don't make the press. Personally I won't even use GroupOn because I feel so sorry for the retailers involved. It's a personal decision.

The next horror story will be from the people scammed by the IPO who thought that they were buying into a company that actually created something of value. Hard to believe that Google once offered billions ($5.75 billion, I believe) for this vaporware company -- and GroupOn actually turned them down. That was the luckiest turndown since Yahoo! refused Microsoft's (by today's standards) insanely generous offer.

Groupon needs a staggered approach (4, Interesting)

Maximum Prophet (716608) | more than 2 years ago | (#38138116)

Groupon should offer a staggered approach. First 100 customers get offered 75% off. Next 100 get offered 50%, then 25%. After a time, the system could float to the discount that was optimal, with some total per day limit.

Similar offer in my city (1)

grantpalin (1994704) | more than 2 years ago | (#38138132)

Interestingly, I was just looking at a Groupon offer for a local cupcake business, offering up to 55% off one or two dozen cupcakes. I'm in a small(er) city, so don't think an event like this story shows will happen here. Hope not, anyway. I appreciate local businesses!

Re:Similar offer in my city (1)

grantpalin (1994704) | more than 2 years ago | (#38138232)

Seems that there is a limit in place on this offer: "Limited quantity available" Shouldn't be too much trouble for the business then.

Reminds me of The Big Bang Theory (0)

Anonymous Coward | more than 2 years ago | (#38138166)

When they made a site for Penny to sell blossoms that she made by hand and had one day rush that resulted in thousands of blossoms from the LGBT community of somewhere.

I never thought I would see the day where something so innocent like that would happen in real life.

Should always do the math and multiply by 1 million whenever you do anything with the internet just for risks sake.
Things can get ugly real fast if you don't do enough Risk Analysis.
Just look at Zynga. Too much growth and not enough income that really hit them hard.

Do'oh! (0)

Anonymous Coward | more than 2 years ago | (#38138278)

Do'oh! Those SHARKS!

Of course the people who ORDERED THEM will be blaming the maker for obeasity.
just don't be responsible.

Where is Homer?

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