I just received (and used) a promotion for a new GoPuff competitor (category of food delivery apps that use strategic hubs to provide rapid delivery of food and convenience items). What I cannot understand is what sort of business strategy would motivate them to offer 50% off anyone’s first order with no limits on order-size.
I ordered $600 worth of stuff including expensive OTC medicines like Zyrtec, cleaning supplies, razor blades etc. Oh and I should note the regular prices were already at or below what a large regular grocery store would charge and there was no delivery fee.
I know the only reason the startup can do this is they’re using venture capital money. But won’t it take them a long time to turn a profit on a customer like me? Has anyone seen other companies do anything this risky?
I always assume the thinking behind those types of promos (huge discount on your first order with their app) is because now they have your credit card number on file and your app (with your last order to help jog your memory) is on your phone. The next time you want some groceries, they’ll likely be the most convenient option for you since you don’t have to go get your credit card, fumble around trying to type it in, remember to put it back in your wallet so you have it tomorrow etc. It’s the same reason, IMO, so many places take paypal. I’ll nearly always use it to pay for things since it means not having to get up and grab my CC.
Granted, I usually see these promos for fast food apps where there’s a much, much higher markup and most people aren’t spending more than five or 10 dollars, not $600.
And as Darren alluded to (stupidity), it’s entirely possibly they just didn’t think or didn’t remember to put a limit on it.
Back in the infancy of web commerce there was a company called Vaule America. They gave out coupons like there was no tomorrow (spoiler: there was no tomorrow) that could be used for discounts up to 50% off on your order. There was no special coding on the coupon to make it single use (as in, the coupon wasn’t “gt466fhvcc45cdf465fx6vg454” keyed specifically to one person or one source, it was something like “value1999”).The coupons were for significant amounts ($20, $50, $100) and you could use more than one at a time. They were made available at specific websites or in print magazines, but, not being in any way restricted, people just shared them on-line. So a coupon found exclusively in Discovery magazine ain’t going to be just known by readers of Discovery magazine. You could use each coupon only once, but nothing stopped you, your wife, both your kids and your live-in Uncle Pete from each using all of the coupons and shipping everything to the same house…
I didn’t have a huge amount of money to burn so I only used a few hundred dollars worth of their coupons for electronics, DVDs, and such, but some people really went nuts.
But it could also be a calculated risk based on some data regarding how the majority behaves.
I don’t have the data myself, but I’d be unsurprised to discover that the number of people who go for the $600 dollar spree is not huge. Not that that even is an absurd spree for a big shop. Most probably do a basic shop trial. Of those who do some will stick with them. And some of the high end items may have profit margins large enough that half off is not losing much or any money.
Meanwhile the splash would be muted by placing much in small print restrictions, which only stop limit so much, and the splash is the point of the promotion.
Not getting consumers to give your service a try in a crowded space is certain failure. This is a gamble banking on most of us not being in the mindset of the OP, AND the service being good enough that once tried many users keep coming back. Better odds of success than no one trying them in the first place.
That parallels the fact that they don’t close loopholes on coupons. We’ve all see (or at least I have) friends, IRL or facebook friends, that show off their receipts every few days along with 20 sticks of deodorant that they don’t use, 2 rolls of paper towels, 10 boxes of kool-aid powder and 4 bottles of windex…all for only $3.25. They could use wording to make sure people can’t double or triple their coupons multiple times over or whatever other tricks couponers use, but they don’t. Presumably it’s not that big of a problem and maybe they like that it means their name gets brought up ‘organically’ in conversation.