CUDO - Ghermaz Cupcakes - Refunding Cupcake Deal Due to Overselling

neil on 04/11/2010 - 02:36

Yet another issue with a venue not being able to keep up with demand of a coupon.

http://forums.whirlpool.net.au/forum-replies.cfm?t=1567530&p…

and

http://rainbowtatt.com/web/why-did-cudo-com-au-ditch-ghermez…

Group buy sites need to be more diligent in checking out the validity dates of the coupons and the venue sizes. In this case, it's reported 4000 orders were made to Cudo x 12 = 48000 cupcakes. How they could think a small shop could make that many cupcakes (of good quality) is anyones guess.

They did do the right thing and be proactive with their refund instead of putting the onus on the customer to decide.

General Discussion

Comments

  • scotty on 04/11/2010 - 11:04

    I think getting featured on popular group-buy site is like a website being featured on Slashdot or Digg (not sure whether this analogy works for everyone), except you have to pay.

    Heaps of traffic/sales and huge cost to calm that extra traffic/sales — but how much can be retained is another story. The theme this year seems to be on those group buy sites, but whether they will still be popular next year?

    • zhenjie on 04/11/2010 - 16:26

      One-day deals sites selling tangible goods were the rage since 2006, and I still see a healthy market from them to this date. Although its obvious the bigger players got larger and the smaller players were relegated to 2nd tiers.

      Group buying sites however has certainly grown a lot faster due to the web2.0 being more prevalent now then when the daily-deals sites were launching. It's certainly here to stay, there is more appeal to the market then daily-deals gadget and products.

    • clandestino on 10/11/2010 - 15:37

      how much can be retained? I think that we all know that the answer is, less than 1%.

      As with practically all things Australian, you only have to look abroad to understand trends and see the future. These websites have done the rounds in the UK for a while now. They started off as great bargains, but now they usually offer leg waxing sessions.

      The moral of the story is : if you see a good bargain, get it now. Because you won't be getting these good deals in 12months time.

  • neil on 04/11/2010 - 16:40

    What a weird loop, Lifehacker (Hi Angus!) just posted about this and now this Ozb link is posted on rainbowtatt's site.

    Ghermaz Cupcakes responded there:

    We genuinely understand and appreciate the level of disappointment that you and all other unredeemed voucher holders continue to feel. We have not taken the decision to rewind the offer lightly. This decision has been one of survival for us. The offer for Ghermez ended up being popular to the extent beyond anticipation and our expectation (approximately 4400 vouchers sold in one day). The deal should have been capped to avoid this dilemma, but hindsight was 20/20 for us at a company with no prior experience with or exposure to group buying.

    Our initial response to the issue was to significantly increase our production capacity overnight, pull in all resources accessible to us to respond to as many queries as we possibly could. We fulfilled over 500 vouchers (that is over 500 dozens of cupcakes – 6000 cupcakes) in two weeks alone. We received almost as many more requests during the same two week period. It is our understanding that the number of vouchers redeemed prior to rewinding this offer, is more than most similar group buying deals do in a 3-6 month period.

    As you would appreciate the premise of entering into these deals from a business perspective is not to make money. It is impossible to make money on such heavily discounted deals (70% in our case) for small businesses. The decision was based on spending money to raise brand awareness. To say that the deal has not achieved that objective is an understatement. That is despite the great loss already endured by us with the redeemed vouchers to date. We found ourselves in a situation that we had to either accept that we will be left with disappointed voucher holders or continue on an unsustainable and financially unviable path.

    The size of this offer meant we literally had to continue to add the workload of more stores without earning the revenue to pay for associated expenses. Perhaps if you think about the size of the deal in dollar value it might help appreciate the enormity of the pressure on us, and the decision that followed. 4379 vouchers would mean over 52,000 cupcakes. Those cupcakes typically sell for $3.80. We fulfilled over 500 vouchers in two weeks. With around 3800 more vouchers (3800 dozens of cupcakes) to go, extending the offer period wasn’t going to help the unsustainable financial impact of the situation on us.

    We are genuinely sorry for the clearly unintentional disappointment caused. The feeling of disappointment around thinking you had a good deal, and having it taken away, despite getting refunded for it, is very real. But if you knew that continuing with the deal was going to put you out of business, what would you have done?

    If our offer had been structured with a cap, the pain and disappointment that followed could have been avoided. We hope this note has given you more insight into a very difficult dilemma.

    Our best wishes, and sincere apologies.

    Makes sense. Naive on the small businesses part but incompetent on Cudo's part.

  • cloudy on 04/11/2010 - 17:46

    what i dont get is what there is a minimum for those sites its nearly ALWAYS reached, why not just cull the 20 to activate the deal (when clearly 200 will sell) and cap it instead? mind blogging…

    • clandestino on 10/11/2010 - 15:39

      simply because there are overheads associated with each deal.

  • djones145 on 05/11/2010 - 13:32

    its just them getting to greedy
    they must have been following the number of sales all day
    celebrating when they sold 4k

    then when the orders came trough they panic

  • Mikinoz on 10/11/2010 - 07:05

    "As you would appreciate the premise of entering into these deals from a business perspective is not to make money. It is impossible to make money on such heavily discounted deals (70% in our case) for small businesses. The decision was based on spending money to raise brand awareness. To say that the deal has not achieved that objective is an understatement"

    So in another words a marketing experiment gone wrong ? yet its the buyers fault , how ?

    • zhenjie on 10/11/2010 - 10:07

      Where in the article has the fault been put on the buyer? It hasn't. They've explained their reasons, but yes, buyers do suffer as does the business itself. They've acknowledged that.

      • Mikinoz on 10/11/2010 - 10:11

        It wasnt in the article , its the obvous outcome.

        • illusionarybreeze on 10/11/2010 - 11:29

          Yeah, but just because you suffer for it doesn't mean it's your fault.

  • Mikinoz on 10/11/2010 - 11:40

    @illusionarybreeze, totally agree!

  • zhenjie on 10/11/2010 - 13:08
    +1

    I wonder if they've put a cap on the latest Melbourne cupcake deal.

  • neil on 10/11/2010 - 13:35

    They certainty don't learn.

    Take a look at CUDO Melbourne's listing today, similar deal, $9 for a dozen cupcakes
    http://cudo.com.au/melbourne

    Similar sort of deal, 2 small locations for these stores, 1700 sold x 12 cupcakes= 20400 cupcakes with 10 hours to go.

    • [Deactivated] on 10/11/2010 - 15:02

      Went to the Melbourne cupcake store today and the cupcakes are tiny bite sized ones. At Cudo's prices they'd still be making a profit.

      • clandestino on 10/11/2010 - 15:46

        It's quickly becoming apparent (in melbourne and sydney at least, brisbane soon?) that the key to getting a good deal is understanding the deal and conditions, 100%.

        Buyer beware.

      • me on 10/11/2010 - 20:53

        Oh no…and I bought two of these :-(

    • djones145 on 11/11/2010 - 13:29

      crazy…. run them to the ground i reckon

  • thesaint on 11/11/2010 - 23:15

    Im sure Cudo wouldnt have run the deal if it had to be capped.

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