102,000 Cupcakes! Small Bakery Burned by Groupon

A British bakery owner loses at least $19,500 after creating a Groupon offer and being swamped with thousands of orders.

LONDON — 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.

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.”

Chicago-based Groupon sells Internet coupons for everything from spa treatments to cosmetic surgery.

Firms sign up in the hope of getting new repeat customers out of the initial deal or selling additional goods to shoppers during their first visit.

Groupon went public earlier this month at $20 a share, valuing the business at $13 billion.

Brown, who has run the business for 25 years, was quoted in the Daily Telegraph saying: “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.

“My poor staff were having to slog away at all hours — one of them even came in at 3 a.m. because she couldn’t sleep for worry,” she told the newspaper. “We are still working to make up the lost money and will not be doing this again.”

Heather Dickinson, international communications director for Groupon, told the BBC there was no limit to the number of vouchers that could be sold.

“We approach each business with a tailored, individual approach based on the prior history of similar deals,” she said, adding the company had been in “constant contact” with Need a Cake.

She later told msnbc.com: “We work very closely with small businesses, but ultimately, they know their businesses best and what they’re able to handle.”

She added: “Need a Cake wanted to run a national deal with us, but we advised them to feature in a few cities so they wouldn’t overextend themselves.”

Original article

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