Monday, November 28, 2011

The Black Swan That Is Cupcakes Meeting Groupon.

As I am apparently a fan of articles on cupcakes, here is one on the downside of some small businesses using Groupon. I truly feel sorry for this lady.

From here:

SNIP*

A bakery owner was forced to make 102,000 cupcakes after being swamped by customers taking up her cut-price Groupon offer, according to reports Tuesday.

Rachel Brown offered a 75 percent discount on 12 cupcakes, which normally cost $40 (£26), the BBC reported.

However, Brown under-estimated the popularity of the deal and was unable to cope when 8,500 people signed up for the $10 (£6.50) bargain.

Video: Who gets the real deal with Groupon?

Brown's Need a Cake bakery, which employs eight staff in Reading, U.K., had to bring in temporary workers through an employment agency to fulfil the orders, at a cost of $19,500 (£12,500) — wiping out her profits for the year.

She also lost between $2.90 (£2.50) and $4.70 (£3) on each batch she sold, the BBC reported.

"Without doubt, it was my worst ever business decision," she told the BBC. "We had thousands of orders pouring in that really we hadn't expected to have. A much larger company would have difficulty coping."

Disclosure/Disclaimer: No position in any securities mentions, though, I do like cupcakes.

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