Feeds

Groupon offer burns cupcake baker’s profits

Be careful what you wish for

Internet Security Threat Report 2014

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. ®

Reducing the cost and complexity of web vulnerability management

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Protecting users from Firesheep and other Sidejacking attacks with SSL
Discussing the vulnerabilities inherent in Wi-Fi networks, and how using TLS/SSL for your entire site will assure security.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.