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BBC MUNDO RADIO
A businesswoman has accused Groupon of almost ruining her bakery company after she was forced to make 102,000 cupcakes at a loss when too many people took up her cut-price offer.
Rachel Brown with some of her cup cakes Photo: BNPS
6:00AM GMT 22 Nov 2011
Rachel Brown, who runs the Need a Cake bakery in Reading, Berkshire, launched
an offer via the money-saving website in the spring in which she offered a
75 per cent discount on 12 cupcakes, which normally cost £26.
However Mrs Brown vastly under-estimated the popularity of the deal and was
besieged by 8,500 people who signed up for the £6.50 bargain.
She ended up losing between £2.50 and £3 on each batch she sold. She also had
to pay £12,500 for the extra costs of hiring staff and sending the products
out, wiping out profits for the year for her business.
Mrs Brown, who had only expected a few hundred orders, said that the
experience was “without doubt, the worst ever business decision I have
made”.
“It's been an absolutely nightmare,” she said.
Groupon is a US-based company that offers money-off coupons to its
subscribers. The coupons give them significant discounts deals on anything
from restaurant meals to spa treatments to fish pedicures.
Companies that sign up to the so-called group-buying website hope to gain new custom out of the deal or sell extra goods to shoppers during their visit.
Mrs Brown’s offer on the website stated: "Twelve Cupcakes with a Choice of Flavours and Designs for £6.50 from Need a Cake (Value £26).
"Today's deal gets Groupon gourmands twelve individually decorated cupcakes from Need a Cake. Customers can construct their ideal cupcake, choosing from sponge flavour, icing and decoration options."
Mrs Brown said: "We had thousands and thousands [of orders] pouring in. We had to cut it off at 8,500 orders. As soon as we were making, packaging and sending the cakes out we were on to the next order. It was non-stop.
“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.
She added that even a much larger company “would have difficulty coping”.
“My poor staff were having to slog away at all hours - one of them even came in at 3am because she couldn't sleep for worry,” said Mrs Brown, who has run the business for 25 years.
“We are still working to make up the lost money and will not be doing this again,” she said.
The company eventually put a message on its website to inform potential customers that the deal in no longer available.
Heather Dickinson, a Groupon spokeswoman, said there was no limit to the number of vouchers that could be sold. She said: “We approach each business with a tailored, individual approach based on the prior history of similar deals.”
Companies that sign up to the so-called group-buying website hope to gain new custom out of the deal or sell extra goods to shoppers during their visit.
Mrs Brown’s offer on the website stated: "Twelve Cupcakes with a Choice of Flavours and Designs for £6.50 from Need a Cake (Value £26).
"Today's deal gets Groupon gourmands twelve individually decorated cupcakes from Need a Cake. Customers can construct their ideal cupcake, choosing from sponge flavour, icing and decoration options."
Mrs Brown said: "We had thousands and thousands [of orders] pouring in. We had to cut it off at 8,500 orders. As soon as we were making, packaging and sending the cakes out we were on to the next order. It was non-stop.
“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.
She added that even a much larger company “would have difficulty coping”.
“My poor staff were having to slog away at all hours - one of them even came in at 3am because she couldn't sleep for worry,” said Mrs Brown, who has run the business for 25 years.
“We are still working to make up the lost money and will not be doing this again,” she said.
The company eventually put a message on its website to inform potential customers that the deal in no longer available.
Heather Dickinson, a Groupon spokeswoman, said there was no limit to the number of vouchers that could be sold. She said: “We approach each business with a tailored, individual approach based on the prior history of similar deals.”
