Groupon Satisfaction Rate Not So Hot, Study Finds
Daily-deal site Groupon skyrocketed to stardom in just two years, generating hundreds of millions of dollars in revenue and inspiring a number of copycats. But this flourishing group-buying model isn’t a guaranteed revenue driver for the participating local businesses, according to a recent study by Rice University.
The study from the university’s Jesse H. Jones Graduate School of Business looked at promotions offered by Groupon, which features a daily deal for each city in which it operates and offers consumers a significant discount for a local good, service or event. The discount is valid only if a minimum number of consumers purchase the deal.
The Rice study found that 66 percent of the 150 merchants responding found the program profitable, while 32 percent said they were unprofitable. Forty percent of the respondents said they would not run such a promotion again. Groupon founder and Chief Executive Andrew Mason recently wrote that 97 percent of its merchants want to be featured on the site again, showing quite a discrepancy in their numbers and those found by the study.
Groupon, touted as one of the fastest growing businesses ever on the Internet, has received backlash from merchants recently who were not satisfied with the outcome of offers on the site. For example, the owner of Posies Café in Portland said in a blog post that Groupon is the “single worst decision I have ever made as a business owner.”
