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CHAKRA Volume 4 Issue 22CHAKRA ARCHIVES |
Cupcake Calamity: GroupOn discount deal leaves baker swamped by orders for 102,000 CAKES and wipes out her profitsby David Wilkes
Swamped by orders, Mrs. Brown, who normally makes 100 cupcakes a month, found herself having to bake an astonishing 102,000.
Mrs. Brown, from Woodley, near Reading, said: "We only expected to get a few hundred orders out of it but we had thousands and thousands pouring in. We had to cut it off at 8,500 orders." Her company, called Need a Cake, normally employs eight workers, but it had to bring in 25 agency staff. After spending an extra £12,500 on staff and distribution, she made a loss of £2.50 per order. 'Without doubt, it's the worst ever business decision I have made,' she said. "It's been an absolute nightmare." U.S.-based Groupon is a deal-a-day' website offering coupons to subscribers, giving discount deals on anything from restaurant meals to spa treatments. It uses collective buying power to achieve lower prices and the deals it offers are available only if a minimum number of people sign up. Companies that offer deals hope to gain new custom or sell extra goods to customers during their visit. Mrs. Brown's offer on the website invited customers to construct their ideal cupcake, choosing from sponge flavor, icing and decoration options'. And it certainly proved tempting. Mrs. Brown said: "As soon as we were making, packaging and sending the cakes out we were on to the next order. It was non-stop. 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. Even a much larger company would have difficulty coping, but my poor staff were having to slog away at all hours. One of them even came in at 3am because she couldn't sleep for worry. I've been running this business for 25 years and I thought I knew what I was doing. We are still working to make up the lost money and will not be doing this again." Heather Dickinson, Groupon's international communications director, said there was no limit to the number of vouchers that could be sold. She said: "We approach each business with a tailored, individual approach based on the prior history of similar deals." She added there had been "constant contact" with Need a Cake and this was the first time she had heard the company had experienced difficulties. But Mrs. Brown has refuted this claim, saying she has written records of correspondence highlighting the problem. Meanwhile, a message on her website informs customers the deal is no longer available. It reads: "The Groupon offer is now closed. We regret that we cannot process any unused vouchers as they have now expired with Groupon." This article first appeared in the Daily Mail on November 22, 2011 |
After 25 years in the baking business, Rachel Brown knew her exquisitely decorated cupcakes were popular. She just didn't realize how popular. So when she decided to drum up a little extra trade with a discount deal, she bit off more than she could chew.
The cupcake catastrophe started when the 50-year-old cook posted a deal on money-saving website Groupon. She offered subscribers to the site a 75 per cent discount on 12 cakes - selling them for £6.50 instead of the usual £26.
