Cupcake Business Loses $20,000 Using Groupon

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We came across an article the other day featured on Mashable about a cupcake business in the UK who decided to use Groupon for their business. Long story short, the business decided to offer a 75% off offer for customers and they found themselves with 8,500 who signed up to buy 12 cupcakes at $10 from the regular $40. They were so swamped that they had to bring in extra help to bake all the cupcakes for the swarming customers. The owner said “Without doubt, it was my worst ever business decision. We had thousands of orders pouring in that really we hadn’t expected to have. A much larger company would have difficulty coping.”

A small business can get overwhelmed with a large group of customers that come in, especially when they don’t completely count on having that large of a crowd come in. They probably shouldn’t have had such a large percentage off of cupcakes when that is their sole product they sale and count on.

Many small business owners have strong feelings about Groupon whether they love it or hate it. Have you ever used Groupon? Was it a success or a flop? 

You can read the original story here on Mashable. Image courtesy of Flickr, sweetlorrainebakeshop

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About

Ashley is the co-founder and co-host of Business Beware. Her passion is learning the background of how and why a business started and of course bringing a little laughter to business owners everyday. Proud member of the YEC too.

2 Comments

  1. Jeanie G. /

    I have debated over using this for my business and now I am thinking twice about it ha! Really though, as a small business owner it’s hard to justify this for your business when you could possibly lose money as well as pay Groupon a percentage. It’s a great service but you really have to figure out if it’s right for your business.

  2. Amy Halbert /

    Oh my gosh that is a lot of money! We used Groupon for our spa and it worked great but we only did a 25% off haircut where we didn’t kill ourselves losing any profit. Most of those customers have been repeat customers so it was definitely worth it but definitely think it through before you just agree to do Groupon.

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