ALEXANDRIA, VA (BRAIN)—The phone was ringing off the hook on Friday at Bicycle Pro Shop in Alexandria, Virginia, and Eric Westerman, manager of the two-year-old shop, didn’t expect it to relent heading into the weekend. Customers are booking appointments for tune-ups.
Despite cold temperatures and rain, the shop will be inundated with new customers bringing in their bikes—redeeming a “Groupon” that offers a bike tune-up for $55, half off of its standard $110 price. By 1 p.m. Friday, 120 people had signed on to take advantage of the deal.
Groupon.com is a local shopping Web site—currently in 40 cities nationwide—that features a single deal each day from businesses as varied as dental offices (teeth whitening) to spas (massages and facials) to restaurants to educational institutions (six-week language class at ABC Language School)—and now bike shops. The caveat: a minimum number of people—set by the company selling its service or product—need to sign on for the Groupon in order for it to go through. (Groupon is the combination of the words Group and Coupon).
Bicycle Pro Shop is one of several bike shops that are using Groupon as a way to reach new customers—typically younger, and tech savvy—boosting store traffic and generating buzz about their businesses.
Prices are typically 50 to 90 percent off of services and goods on Groupon.com, which collects payment and takes about half of each sale as commission—then cuts the merchant a check. Consumers have a set time to redeem each Groupon.
“It’s a way for bike shops to get customers in their stores. Consumers get a great discount and merchants get great exposure,” said Mark Desky, vice president of marketing for the Chicago-based company with 230 employees. Groupon, founded in November 2008, has a growing database of 3 million email subscribers, he said, who are alerted of their city’s deal daily. The company also leverages social media tools like Twitter and Facebook to spread the word. Last month, Groupon ran 1,000 deals, Desky said.
Desky said he expects Groupon to have local shopping sites in 100 U.S. cities by year’s end. Last Thursday, it launched an iPhone app to allow consumers to browse daily deals, access their account to find and organize purchases, redeem their Groupons at merchants from their screen, and map local Groupons using GPS to find the closest purchase to their current location.
“Clearly, in the down economy people are looking for deals so that helps, but we see this as an alternative to traditional advertising in newspapers and radio or TV even,” Desky said. “We guarantee a minimum number of customers delivered. If the tipping point isn’t achieved, they don’t owe us anything, we don’t owe them anything.”
Dan Sorger, owner of the Dutch Bicycle Company, in Boston, Massachusetts, learned about it through his wife who was a subscriber, and he offered his first bike tune-up Groupon last August. His minimum was 50, but 363 bought it.
“The nice thing is, because these people are interested, it’s easy to upsell them on accessories like lights, saddlebags or other parts,” said Sorger, who’s planning another Groupon this month and in September. “These people come back all winter—they’re keeping me eating and I can keep the heating on all winter in the shop.”
Family Bicycles in Kansas City ran its first Groupon in early January. Owner Theresa M. Van Ackeren said it helped with cash flow in the months of January and February and into March, “extraordinarily slow months for us,” she said, especially in light of record snow in the region.
However, she doesn’t expect to use Groupon more than once a year. Van Ackeren was on the fence about it at first—her two-year-old business prides itself on service and the expertise that her experienced shop mechanics bring to the table.
“You don’t want to discount service—I went back and forth about it. But I figured, it’s one time a year, one day, if it brings in a new customer, so much the better,” Van Ackeren said. “My hope was that people would dig their bikes out and bring them in when we’re slow.”
Her Groupon got swept up by 159 people in her city—only 30 were existing customers, who she had emailed about it.
Most shop owners using Groupon offer discounted labor on bike tune-ups (replacement parts aren’t included), saying margins aren’t high enough to offer the same types of deals on bikes or P&A.