Tony Hsieh Taps Groupon to Sell 1,642 Books in 3 Days

Toward the end of my last Tribal Author Book Marketing Camp in NYC, I talked about “ninja” book marketing strategies.

These were tactics that were on the cutting-edge. They generally fell into one of 3 categories:

• Strategies that’d either been tried, but not yet refined enough to make sense
• Under-the-radar approaches that nobody had yet tried, and
• Thing’s I’d done or been working on, but never shared publicly

Well, last week, one of these strategies was tested in a very public way.

Tony Hsieh, who many of you know as the founder of Zappos, teamed with group buying service, Groupon, to sell 1,642 copies of his new book, Delivering Happiness (aff link), in about 3 days at $10 a book or 58% off retail price (which is substantially below what even amazon is pre-selling the book for).

For those not in the know, Groupon is the leading group buying website. The way they work is:

• A vendor proposes to have Groupon offer it’s members a particular product or service at a steep discount
• Groupon schedules the offer to go live on their website for a short period of time.
• Groupon then emails their list of up to 3 million (maybe more now) people to tell them about the offer
• People commit to buying whatever is being offered, but…
• The offer does not go live or “tip” until a specified minimum number of people have committed to buying
• People tap social media to spread the word to push the offer to tip, so they get the deal
• Once the minimum is hit, the offer goes live and more people pile on until the offer period ends.

That’s what happens publicly, but what most people don’t know is that, behind the scenes, Groupon takes about 50% of the revenue that comes in and passes the rest along to the vendor. So, for example, in this case, the book was selling for $10. Groupon would take half of that as their fee, leaving you with $5 on a $24 hard cover book.

Because of this, it’s not unusual for businesses to only break even, lose or gain a very small amount. But, if it’s the right product and the right business, Groupon and serivces similar to it, like Living Social, can send thousands of new buyers your way…people who may end up repeat customers at full price.

I’ve been trying to figure out how to make Groupon work for bookselling for a while now. And, apparently, so was Tony Hsieh. Because last week, Groupon featured his new book, Delivering Happiness (aff link), as what they’d call a secondary offer (it was positioned as a smaller offer next to the featured offer for a number of days.

Here’s what the offer page looked like:

The minimum was hit and the offer “tipped” or went live at the 1,000 book mark a little more than a day into it and ended up selling 1,642 books.

Question is…can you do what Tony did?

First, my sources have confirmed what I believed to be true. This deal was made directly with Tony, not through his publisher. Because the publishers can’t sell at a price low enough to make the numbers work. Could they sell to Groupon at 58% off? Yes, but remember, Groupon takes another 50% of the sale price, so publishers would actually have to sell the book at 79% discount to make this deal happen…and that will never fly (at least not for a new/non-remaindered book).

So, the deal would have to be done privately between the author and Groupon.

The likely scenario goes something like this: the author commits to buying the minimum (here it’s 1,000 books) from the publisher at a 60% discount, then eats the Groupon fee and shipping costs. In this case, that’d end up costing the author around $7 for each book sold for a loss of about $11,500.

Now, could Tony have struck a better deal with Groupon to be the first bookseller to try this? Sure, I’m guessing he did. But, I still can’t see how he could’ve walked with anything but a loss.

The question is why would he do this at a loss…and why might you?

Three potential reasons:

• If you feel there’s enough PR and advertising value in that (3 million people will be exposed to your book every day of the offer), you may be willing to chalk up the loss as promotional expense.
• If the book is more of a lead generation piece in a bigger business funnel, it may still make sense to take the loss in the name of sending thousands of new leads into your funnel in a matter of hours. And…
• If you’re self-published, there may be enough extra margin to allow you to make it through a group buying promotion without taking a loss.

So, where does this leave us?

First, you’ll have to do the deal yourself, traditional publishers won’t/can’t sell at a low enough discount to make it work. So, you’ll have to buy at your best discount, then take the loss incurred in paying Groupon or some other group buying service their fee, then figuring out how to cover the costs and logistics of shipping.

I’m still looking at this at a potential channel for my next book. But, truth is, the vast majority of authors aren’t willing to take the loss in the name of buzz. Nor do they have a bigger business funnel set up, making group buying sites, at least for now, not a hugely viable means of marketing and selling books.

Keep your eye on future book offers through these sites, though. There’s may be some interesting strategies that evolve over time.