Toronto Business Speaks Out on Groupon's Daily Deals
Being virally linked across the internet this weekend was a blog post by a Toronto business. The Healthy Butcher published “You Get What You Pay For - Why Deep Discount Coupons Aren't Sustainable in the Food Industry” to explain why they don’t participate in deep discount deals.
The Healthy Butcher stated that in Toronto there are no less than a dozen discount sites which ask daily if the company wants to participate. The Healthy Butcher prides itself on honesty and full disclosure and therefore decided to clarify the reason Groupon and others just don’t make sense for their business plan.
As you know, Groupon and other discount sites post daily deals which equal 50-80 per cent off regular price. Daily deals are emailed to members and posted on the web. These deals are claimed at a later date by customers that pre-purchase vouchers.
Companies that participate are promised by the discount sites that these deals equal “no cost” marketing, that they broaden customer bases, and will receive immediate payment from vouchers that are purchased. Even more, discount sites point out that some customers never redeem their vouchers.
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What it really all comes down to is a company’s Gross Margin. As the food industry runs at a much lower Gross Margin than other industries, these deals cost comparatively more. In case studies presented by The Healthy Butcher, it compared a daily deal marketing cost for a spa at $12,500, which can be offset by repeat customers, to The Healthy Butcher’s potential cost of $237,500.
“Everyone loves a good deal, especially me. Everyone who knows me knows I’m one of the cheapest people around; I pickup pennies off the floor, I buy clothes at discount stores, and rarely splurge on anything. But when it comes to health, and food, I have learned firsthand that the old adage “you pay for what you get” rings more true than in any other industry,” said Mario Fiorucci, co-founder of The Healthy Butcher.
The Healthy Butcher explained that they offer products at the best prices possible. With meat raised using ethical, sustainable and Certified Organic Standards, customers are already getting a great deal. The Healthy Butcher believes that discount sites need to change their business model for the food industry to participate, but until then “The Healthy Butcher will not, and cannot discount its products to absurdly low levels.”