Groupon Cupcake Deal Floods Rachel Brown's Need A Cake Bakery With Thousands Of Orders

When the owner of a small bakery outside London posted a deal for cupcakes on Groupon, she ended up getting more than she bargained for.

Rachel Brown, who runs Need a Cake bakery in Reading, Berkshire, offered a 75 percent discount on a dozen cupcakes in the spring. She expected the offer would generate perhaps a few hundred orders. Instead, thousands started pouring in.

"We had to cut it off at 8,500 orders," she told The Telegraph. "As soon as we were making, packaging and sending the cakes out we were on to the next order. It was non-stop."

Need a Cake normally fills about 100 cupcake orders per month, according to the BBC. Suddenly faced with baking 102,000 cupcakes, Brown was forced to hire 25 workers to supplement her normal staff of eight, according to The Daily Mail.

Brown told The Telegraph she ended up spending about $19,500 in extra labor and shipping costs, wiping out a year's worth of profits. It was "without doubt, the worst ever business decision I have made," she told the paper. "It's been an absolute nightmare."

Heather Dickinson, a Groupon spokeswoman, told The Telegraph that 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.

Comments

[Hani Banna]

09:30 AM on 04/27/2012

How is it possible not to have an upper limit! The whole thing smacks of bad due diligence on behalf of Groupon. They could have easily checked how many cupcake orders the bakery can handle!

hb40
http://dealsminder.com

[Song Hua Li]

04:54 PM on 02/08/2012

Don't blame the customer, go blame Groupon, livingsocial and greedy owner.

What is the chance customer who bought groupon or livingsocial would come back?

No repeat customer willing to pay $40 for cupcakes because they had learned that they can get 75% off which is cost them $10.

Everyday there is more groupon coming out each day.

[Jack Robertshaw]

11:41 PM on 01/28/2012

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[KadejaLatefah]

07:21 PM on 01/15/2012

knowledge of math is fundamental for business owners. a 75% discount is ridiculous! cupcake lovers would have enjoyed much less I am sure.

[Kristin Kanan]

12:38 AM on 11/30/2011

This reminds me of I Love Lucy.

[dadw5boys]

09:52 AM on 11/29/2011

who discounts anything 75% without setting limited offer on it from the beginning.
why not 25 % to begin with ? try a business school for evening classes and learn

[Jane Do]

05:44 AM on 11/29/2011

What the heck does 40 dollar cupcakes have in them? Gee whiz I can whisk up a batch for under six bucks!

[Jane Do]

05:39 AM on 11/29/2011

You live, you learn. Wonder if super congress will intervene? LOL!

[Jennifer Malcom]

04:40 PM on 11/28/2011

That was absolutely the stupidest thing she could have done! WOW! 75% off! How on earth did she expect to make a profit on THAT?

[Jane Do]

05:38 AM on 11/29/2011

I agree, I'd of made it buy one dozen at 40 bucks, get the next dozen half off! or maybe 75 %, according to how much one can scrap from the bowl when the higher dozen is poured!

[Nyominx]

08:02 PM on 11/27/2011

There certainly seems to be a pattern of irresponsibility here on the part of both Groupon and some of the small businesses offering deals through the site. I've had something like this happen to me twice via Groupon and I've really soured on the whole thing. For example, I purchased a Groupon for two hours of housecleaning at a very enticing discount. It's something I normally wouldn't spend money on and would probably only do again on rare occasion. I found out later that they sold over 9,000 (!) of the deals, and I wouldn't be able to get an appointment with the service provider for at least 6 months, barely within the amount of time the deal would expire. Obviously personal accountability on the part of the business offering the deal is key, but in the long run it would be in Groupon's best interest to make an extra effort to educate when selling Groupons to business owners who don't think about realistic fulfillment of the orders for their goods or services.

[Jane Do]

05:36 AM on 11/29/2011

Now imagine if they'd of made the deal one dozen at regular price, get another dozen for 10 bucks. They need to hire me for marketing! I work cheap, even for cupcakes!

[Alan Brown]

05:59 PM on 11/26/2011

Sloppy Deal Making Bakes Small Business

"Groupon? Ah, what's the worst that could happen?" You should be ANSWERING that question and structure things accordingly.

[French Toast]

10:17 PM on 11/25/2011

Another happy Groupon customer.

I can't wait for Groupon to close its doors forever.

[Bigtip]

07:13 PM on 11/25/2011

Groupon really doesnt give much control to business owners in regards to the deals they offer. Other sites, like BigTip, allows powerful tools for merchants and the deals they make. If this particular business used BigTip, they'd be able to pull the plug on the deal as soon as they realized they were losing money. That way, they can pass on the savings to the customers. Definitely worth checking out: http://www.bigtip.com BigTip

[typeterson]

05:14 PM on 11/25/2011

group on is a very risky endeavour for any small business. the goal is to bring in new customers, which it is very good at, and the goal for the business is to keep as many of those new customers as repeat buyers. fine and good in theory, but what has happened is that now there is a new niche of shoppers, those that only buy these daily deal coupons, who never have any intention of returning to the businesses they buy the coupons for, and only shop with daily deal coupons. this leaves the business absorbing the cost of using a daily deal coupon, which is a huge cost, and not keeping the customers. its a bad move for most existing businesses. start-ups may see a benefit if they include the cost of a daily coupon deal into their start up expenses, but for existing businesses, more often than not, it results in a financial loss. the cat is out of the bag.

[o3mta3o]

03:30 PM on 11/25/2011

i know of a small restaurant that uses groupon effectively. their coupons always consist of a 1 per buyer, very long (possibly even no) expiry dates and stipulations like "eat in only" "cannot be used on holidays" "must make reservation" ect ect. they didn't book more than a few redeemers a day either. overall they seem pretty happy with their experience.