Can Groupon Win Back Small Business Owners?

Can Groupon Win Back Small Business Owners?

Groupon continues to acquire Small Businesses

Groupon launches new productsGroupon’s relationship with small businesses has been one filled with turmoil.

When first launched, Groupon deals were quite popular and many restaurants and businesses clamored to be involved with the site. Problems quickly arose and soured many small business owners on using Groupon as a form of promotion. Owners found that many of the customers who used groupons did not become repeat customers, rather, they were likely to wait for another deal. Horror stories regarding lack of payments are a very common refrain from former customers. Based on a survey of more than 100 Groupon merchants, about a third of them were “unsatisfied” or “very unsatisfied” with the service. Groupon has been in the process this year of launching new services in an attempt to better serve small businesses and boost sales.

Groupon recently acquired Breadcrumb, a company that runs an iPad app that’s looking to replace current point-of-sale products. Started in 2012 by Seth Harris, Breadcrumb is going head-to-head with traditional restaurant POS providers such as OpenTable, Aloha and MICROS and recently launched mobile payment service, Square. Breadcrumb has been tested at about a hundred New York locations but is now available nationally. Unlike competing systems, there’s no long-term commitment to use the system. Items such as cash drawers, receipt printers and kitchen order printers can be added to the system with ease. The system’s low cost versus traditional POS systems is a huge draw for owners.

Another service launched by Group is a tool for vendors called Groupon Payments which allows businesses to take credit card payments using their iPhone or iPad. This service claims to make credit card transactions easier to process and at a lower rate than the current industry rate. The process rate for Visa, Discover, and Mastercard are 1.8% and 3% for American Express (plus 15 cents per transaction). Both compare to flat fees for Square and Paypal of 2.75% and 2.7%, respectively.

While these new services look appealing to merchants, will this be enough to get business owners to return to Groupon as a means of promotion? Perhaps, but Groupon also needs to address the grievances of previous customers as well as repair their brands reputation before small businesses will once again embrace them.