My Maid Service is not the first company my brother and I have worked on together. Way back in the frontier days on the internet, my brother and I had a web site called www.theaquaticshop.com. Shawn is a very serious animal enthusiast and breeds fish, reptiles, has a dog, a couple frogs, and a falcon. His house is literally a zoo but he takes fantastic care of his animals. Shawn saw an opportunity to set up a web site to sell hard to find high end supplies needed by people that keep fish rooms, not fish tanks. It was a small community and Shawn had a great reputation. My home just happened to be near the largest distributor of pet supplies in the world. Shawn would run the community and I would pick up and ship the orders. It seemed like a great idea. We would provide a far greater catalog than the local store and at better prices. The high end stuff we were selling was not in most stores and if it was they sold 2 or 3 a year so they marked it way up. It We opened our doors in November 1998 and it was a huge success….. for three months. Then in early 1999 Pets.com opened.
Pets.com was backed by venture capital funds and Amazon.com. Our most profitable items were medications. Pets.com was selling them for 25% less than our cost AND offering free shipping. They were killing us. We could not figure out how these guys were making money. We tried to hold on but in March of 2010 we declared defeat and shut down the shop. You can provide the best service in the world and offer great advice but when the other guy is selling 50% less than you, there just is nothing you can do. Pets.com had over $100 million in venture capital funding and they went public at $14.00 a share raising even more money. It was the dot com boom and Pets.com was everywhere. In November 2010, after just 18 months and it was over . Pets.com burned through hundreds of millions of dollars and shut down. Once it all fell apart it became public that Pets.com was selling most items for 25% less than COST. Hah, just what we always knew. But it was too late for us. We had closed up shop.
So what does this lesson have to do with Groupon? Well I think Groupon is pets.com part 2. They are growing like mad but they are losing money on every sale. The businesses they buy from are by and large not happy with the results. And they are causing pure havoc on every industry they touch. Pets.com just hurt the pet care industry. Unfortunately, Groupon is hurting every small business in America. The good news is I do think the ride is nearly at an end for Groupon. Just like Pets.com, the news is coming out that Groupon is losing money, their suppliers are not happy, and the glow is coming off them. So hold in there. Every now and then I wish Shawn and I had kept theauquaticshop.com. We knew what Pets.com was doing was not sustainable but we just could not tolerate the pain anymore. Don’t make that mistake. Hold on, Groupon will fade just as Pets.com did. In the meantime. DON’T EVER FALL FOR IT AND RUN A GROUPON! I will run another article on why later but please do nothing that feeds the beast and keeps it alive for another day.