Originally Posted by dchockeyguy
We used Living Social (as opposed to Groupon) for our Cake Show this year. Living Social is based in DC, where I am, and they love cake things. They were really helpful for us.
We had a HUGE success using them this year. While we offered basically 2 for 1 admission, people came and bought everything pretty much from our bake sale, which turned it's biggest profit ever. One vendor at the show completely sold out of all their fondant. Others were doing a brisk business as well.
I think, depending on what you're doing, it's a great item.
It probably boils down to the proportion of fixed costs to variable costs in the product being offered - the lower the variable costs, the more successful you will be with this kind of promotion.
For example, a ticket to an event or an online software download has virtually zero variable cost (the cost of printing the ticket, and the cost of the bandwidth to download the file), it is all fixed - the cost of putting on the event doesn't change if one more person buys a ticket, and the cost of developing software is the same regardless of how many people download it.
Cake, on the other hand, is mostly variable cost (ingredients and labor) with a relatively small fixed cost component (monthly rent, insurance). Each additional product incurs significant added costs, and that's why Groupon fails so spectacularly here.