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Not only is Groupon expensive for merchants, it also damages their reputation: Study

New research conducted by John Byers and Georgia Zervas from Boston University and Michael Mitzenmacher from Harvard University reveals a fascinating downside to merchants running group buying deals: they hurt not just the wallet, but the reputation, too.

The hammer has hit the nail on the head many a time when discussing the financial burdens merchants must bear to endure the supposed benefits of tossing their lifeline into the firey daily deals space. But up to this point, no detailed, quantifiable research has targeted insight into another key aspect of how these deals influence merchants' success: reputation. 

My immediate guess was that daily deals boosted rep—a silver lining to the dark, shadowy cloud companies like Groupon hide behind. But as it turns out, the opposite is true.

This chart shows that running a Groupon offer has two distinct effects. The first is that you get a boost in Yelp reviews. The second is that more of your Yelp reviews are poor. And the affliction lingers: Yelp ratings increased in volume and continued to decline in positivity even after a full 6 months post-Groupon. Ouch.

The "why" of this effect remains unclear. Are merchants failing to deliver positive experiences to the influx of new customers? Are complex or erroneous Groupon deals causing confusion among consumers? Or are more bad businesses than good businesses using Groupon and simply getting more awareness of consumers, exposing their negative elements?

Whatever the reason, this is more convincing data suggest merchants ought to be wary of the daily deals space.

Credit: Technology Review, arxiv.org/abs/1109.1530.

Source: TechVibes : http://www.techvibes.com/blog/not-only-is-groupon-expensive-for-merchants-it-also-damages-their-reputation-study-2011-09-13#

 

Google Acquisition History - Great InfoGraphic!

Research by Scores.org

Apple's iPAD is a lost naming opportunity. Apple should have expanded on its iTouch product branding.

Apple Inc., a company that normally takes great care in keeping its product names highly descriptive and simple, stumbled last week at the launch of the its iPAD web tablet device last week.  It seems a lot of people, especially women just did not take kindly to the iPAD name.

The Apple iPAD, is basically an iTouch (WiFi-only models) or an iPhone (WiFi/3G models) with a larger 9.7" screen and using the same iPhone operating system and capable of leveraging the iPhone App Store.  Of course, some existing iPhone features have been stripped out (the camera for instance) and Apple does not see too many users wanting to hold up the bulky device to the ear and talk into it, replacing their mobile phone.  Other key features users were hoping to see are still sadly missing: Multitasking support in the OS, Flash player support, and dual-cameras for video chatting.

As an owner now on his third iTouch, I just cannot understand why Apple picked to build a new product category under the name "iPAD" when it could have easily extended its popular "iTouch" product branding to the new tablet devices.  Customers and the press would have easily understood the capabilities and the method of operation with a simple name like:

•    iTouch 10", or
•    iTouch XL, or
•    iTouch Pro, or
•    iTouch Tablet

Of course, Apple is the same company that made popular the iPOD brand to represent its portable music/media device.  Not exactly the Sony "Walkman" brand simplicity out of the gate, but Apple made iPOD work for them!  The only thing that matters is success, and Apple is way out in front of everyone when it comes to portable digital music players, touchscreen mobile phones and now larger touchscreen mobile tablets.

On a side note, an overseas contact of mine estimated that the iPAD build cost for a company ordering parts in the millions per year, would be around US$171 for the 3G 16GB unit and about US$17 less for the simpler WiFi-only model (not including the microSIM card or packaging).  I'm sure iSuppli will publish their own tear-down cost estimates in the coming weeks.  Add in R&D amortization costs, packaging, shipping, Q/A and Sales costs, and Apple still has plenty of room to make its 40%+ margins plus throw in some AT&T commissions and margins on App Store and media content sales and you can see why Mr. Jobs wants to build this into a key fork in Apple's income stream.

Personally, given that I have continuously upgraded my iTouch annually from 8GB, to 16GB and now 32GB, I am trying to quash any inner thoughts to purchase an Apple iPAD in its current first generation.  I'm sure that by Fall 2010 or at least in Winter 2011, Apple will have at least upgraded the iPAD product line to include at least one camera, multitasking support and upped the base memory to 32GB.  Hopefully, Apple also will give the users what they want and stop playing their corporate games and support Adobe's Flash Player.

Microsoft to Pay Users to Use Their Search instead of Google

As first suggested here on Bitpad.com on June 22nd, 2005

CNBC this morning reported that Microsoft is to pay end-users a share of the revenues they generate via usage of the Microsoft search engine.  My original suggestion to Microsoft (or Yahoo, etc.) in June was an idea for Microsoft to kill Google's cash cow search business.

The permalink for the June 22nd article can be found at How Microsoft can kill Google.

This was apparently shared by Gates during his recent trip to India.  Until I can gather more facts on how the methodology would work, I suggest readers check-in at John Battelle's Infoworld article at his SearchBlog.

Great to see Microsoft steal an idea, even if it took them six months!