Feeds

Groupon offer burns cupcake baker’s profits

Be careful what you wish for

Top three mobile application threats

A British baker has seen her entire annual profits wiped out after a Groupon deal went horribly awry.

The Need a Cake bakery in Reading, Berkshire, signed up with Groupon to offer a 75 per cent discount on an order of a dozen cupcakes, cutting the cost from £26 to £6.25. Unfortunately for the small bakery, the offer proved too tempting – over 8,500 sugar-craving people placed orders before the baker was forced to end the offer early.

Owner Rachel Brown told the Daily Telegraph that the Groupon deal was “without doubt, the worst ever business decision I have made. It's been an absolute nightmare.”

Faced with such a massive spike in demand, Brown was forced to work all hours and hire extra staff to meet Need a Cake's shipping dates. Complicating matters was the offer of customer choice of sponge flavor, icing, and decoration options. Some staff were beavering away at 3am, trying to catch up.

Brown took a loss on each order, and estimates the Groupon deal has cost her £12,500 – her annual expected profits.

“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,” she said.

Ms Brown is hardly the first to be caught out by an ill thought-through marketing idea. The unofficial record for marketing cockups is held by the Hoover vacuum cleaner company – an example that's still in textbooks today. The company lost £50m and incalculable amounts of good will after promising two free transatlantic flights with every vacuum cleaner purchased, and then trying to weasel out of the deal after failing to realize the obvious point that when the promotional item is worth more than the product, people get smart.

McDonalds, too, has fallen into the seductive trap of marketing hitting reality. During the 1984 US Olympics, the fast food giant came up with the idea of giving away scratchcards that revealed an event, and then offering a free Big Mac, fries, or Coke if America won a medal in that discipline. Unfortunately for Ronald, however, the Soviet Union and Eastern Germany, the usual winners of the biggest medal total, decided to boycott the games, leading to America winning 174 medals. The ensuing chaos was later parodied by the Simpsons.

Nevertheless, El Reg feels it would be in Groupon’s interest to examine deals such as Ms Brown’s for sanity before letting them run. Salespeople are obviously keen to sign up new retailers, but they should have the sense to say “that’s a great idea, but…” if they want repeat business. ®

Top three mobile application threats

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

Designing a defence for mobile apps
In this whitepaper learn the various considerations for defending mobile applications; from the mobile application architecture itself to the myriad testing technologies needed to properly assess mobile applications risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.