Groupon faces an Angry Mob

[$5 submissions]

Don't fuck with trust... specially from groups.

Source: http://money.cnn.com/2011/02/11/pf/g...lash/index.htm

A day after Groupon offered $20 off of $40 worth of flowers and gifts from FTD, users are calling the deal a scam.

The coupon, which nearly 3,300 people bought, directed buyers to a special FTD website -- FTD.com/groupon -- to take advantage of the offer. The problem, users said, was that prices were higher than on the regular website, effectively diminishing the value of the deal.

[DateDoc]

Sounds like an FTD scam but Groupon should have vetted the offer better.

[BJ]

what a bunch of idiots, like people weren't going to check.

[DateDoc]

If you want a better deal than Groupon try http://www.lifesta.com which is a secondary market for coupons ppl have bought from Groupon et al.

[Ron Bennett]

On a related topic, for those who use Facebook as their forum platform, note all the spam!

There's the $67/hour spam posts along with all the link spam in the CNN article discussion thread - surely one would think Facebook's filters would catch much of that nonsense, but guess not. Anyways, Facebook's forum platform is junk - so limited and poorly laid out, but I digress.

As for Groupon - as many others have pointed out before, it's not overly unique - low barrier to entry to competitors.

It's no wonder some merchants use sneaky tactics to jackup the price, such as what FTD did, during Groupon promotions. Groupon is very expensive for merchants who, in essence, not only have to cover the discount they're offering, but also must send Groupon a cut of that ... a double whammy.

Ron

[emjay]

Originally Posted by Ron Bennett

Groupon is very expensive for merchants who, in essence, not only have to cover the discount they're offering, but also must send Groupon a cut of that ... a double whammy.

Ron

They don't need to, it's the other way round since Groupon collect the money. I Still can't quite believe that they turned down $6bn from Google, who will probably moving into the social group buying space anyway.

[$5 submissions]

Originally Posted by emjay

They don't need to, it's the other way round since Groupon collect the money. I Still can't quite believe that they turned down $6bn from Google, who will probably moving into the social group buying space anyway.

They wanted to take the money but were worried about antitrust. At least that's what the VC buzz was...

[kazbalah]

6 Billion - Id take it and run. If anyone wants to buy my 2k / day link list for 2 billion ill take it

[Ron Bennett]

Originally Posted by emjay

They don't need to, it's the other way round since Groupon collect the money. I Still can't quite believe that they turned down $6bn from Google, who will probably moving into the social group buying space anyway.

The merchant has to further lower their price (well unless they plan to pull a FTD stunt) to cover Groupon's cut of the coupon. The merchant is paying.

Ron

[L-Pink]

Don't tell me what I'm spending, tell me how much I'm saving.

.

[DateDoc]

$6 billion is a lot of $$ but just over 1/3 of what they will make from their IPO this year.

[rowan]

Broadly related, some retailers have been caught making overinflated claims about savings during sales... the sale price and apparent savings added together are well over the RRP!

eg product's sale price is $200 ("SAVE $500!") yet the RRP is $400.

[Klen]

Originally Posted by Ron Bennett

The merchant has to further lower their price (well unless they plan to pull a FTD stunt) to cover Groupon's cut of the coupon. The merchant is paying.

Ron

Howmuch exactly groupon is charging ?

[candyflip]

Originally Posted by KlenTelaris

Howmuch exactly groupon is charging ?

Upwards of 50% of the payment.

A friend of mine did a $16 voucher for $8 and Groupon got $4 of it. They made hardly any money on the deal.

[DEA - banned for life]

[candyflip]

As a side note, if anyone is in need of a job, Groupon is probably hiring a few sales reps in your area.

http://www.groupon.com/jobs

[woj]

actually many "deals" are like that, they make it sound like you are getting half price steal, but if you consider all the details, etc you maybe save 20%, not bad, but in many cases hardly worth the drama...

[Cyndalie]

Groupon is selling coupon codes only redeemable through an affiliate link. FTD is notorious for this, as is proflowers and other sites. You click on a sale ad to get a site where you can only use that coupon code.

It flat out says "Post-2/14 option not valid until 2/15. Groupon value reduces by $20 on 6/16/11, except where prohibited."

It also flat out said it's only valid at "the following website: www.ftd.com/groupon"

Anyone knows that when you buy a coupon read the fine print and make sure the prices are in line with what you will be saving.

People are dumb, the timing of the promotion was dumb, and I honestly don't think Groupon should be held at fault. The prices seem to be the same now between the 2 sites anyway.

[O MARINA]

Originally Posted by KlenTelaris

Howmuch exactly groupon is charging ?

some 50/50 and
60/40

[O MARINA]

Originally Posted by DateDoc

http://www.lifesta.com .

never seen that before!

[Agent 488]

can see the whole thing collapsing once the bloom is gone ...

[jml23]

groupon takes 50% and staggers payments out as well. It can seriously crush an offer and put some merchants in the red big time. I have heard some horror stories. Im sure it works for some.

[Klen]

Holy Fuck 50% ?????Can someone explain what's a point of using them then?I mean,you already losing some money by giving discount on coupon,and then you need to give additional 50% ?I dont see a profit in that,especialy if you sell hardware goods where income is very little.But that would explain why they valued company to 3 billions.

[Agent 488]

if they acquire new customers and turn them into return customers may be worth it.

Originally Posted by KlenTelaris

Holy Fuck 50% ?????Can someone explain what's a point of using them then?I mean,you already losing some money by giving discount on coupon,and then you need to give additional 50% ?I dont see a profit in that,especialy if you sell hardware goods where income is very little.But that would explain why they valued company to 3 billions.

[kristin]

That was more than likely the florist and not Groupon.

There was a Groupon for $25 for $50 worth of food at this really good Mexican restaurant. We used ours no problem the first weekend, the following week the restaurant shut down. Groupon issued refunds for them based on the honor system because they couldn't get the used ones from the restaurant. Let's see if they make good first.

[DateDoc]

Originally Posted by KlenTelaris

Holy Fuck 50% ?????Can someone explain what's a point of using them then?I mean,you already losing some money by giving discount on coupon,and then you need to give additional 50% ?I dont see a profit in that,especialy if you sell hardware goods where income is very little.But that would explain why they valued company to 3 billions.

Lets say you have a $10,000 advertising campaign to run. You can buy radio spots, ads in the paper but I doubt you could run a tv commercial for that amount. Now, instead of buying newspaper ads you put this money towards your Groupon campaign. Groupon emails a 100k people in your area (more or less depending where you live) letting them know about the deal and it is featured on the local Groupon site for the day.

Your $10,000 newspaper, radio, tv ad will not bring in as many people as a Groupon campaign will. Plus, the cost of advertising is not upfront with Groupon. In fact you get to pocket money right off the bat but that will get eaten up as the Groupons are used.

[Klen]

Originally Posted by DateDoc

Lets say you have a $10,000 advertising campaign to run. You can buy radio spots, ads in the paper but I doubt you could run a tv commercial for that amount. Now, instead of buying newspaper ads you put this money towards your Groupon campaign. Groupon emails a 100k people in your area (more or less depending where you live) letting them know about the deal and it is featured on the local Groupon site for the day.

Your $10,000 newspaper, radio, tv ad will not bring in as many people as a Groupon campaign will. Plus, the cost of advertising is not upfront with Groupon. In fact you get to pocket money right off the bat but that will get eaten up as the Groupons are used.

Aha so it's basically form of advertising.

[kristin]

Originally Posted by jml23

groupon takes 50% and staggers payments out as well. It can seriously crush an offer and put some merchants in the red big time. I have heard some horror stories. Im sure it works for some.

I asked the spa owner once how Groupon works on their side and she tells me the % and I asked, "is that on the price paid or the price overall?" and she said it all depends how good your negotiating skills are.

Personally I love Groupon but I believe it is hindering brand loyalty and will mess with pricing for all services.

[Abbie]

LivingSocial (similar to these sites) is in Hot Water here in WA:

http://www.king5.com/news/consumer/C...116280124.html

for having expiration dates on gift cards, etc.

These sites are going to burn themselves fast.

[candyflip]

Originally Posted by KlenTelaris

Aha so it's basically form of advertising.

Yep. In my example they sold about 1200 and I would guess at least 50% of them would be new customers.

[DateDoc]

Originally Posted by Abbie

LivingSocial (similar to these sites) is in Hot Water here in WA:

http://www.king5.com/news/consumer/C...116280124.html

for having expiration dates on gift cards, etc.

These sites are going to burn themselves fast.

That lawsuit isn't going anywhere as it states on the site that if expiration dates are illegal in your state then there is no expiration date.

[lazycash]

Originally Posted by KlenTelaris

Aha so it's basically form of advertising.

Yes, generally considered a loss leader to attract new customers. However, depending on the creativity of the deal and its pricing, I've seen instances where I knew the merchant was still going to clear a profit even though they are basically offering their service or product for only 25 cents on the dollar.

There's a couple variables that also come into play that benefit the merchant, generally only 70-80% of the deal vouchers are actually redeemed, meaning the merchant was able to collect money without ever encountering an offsetting expense. Also, the merchant gets a nice chunk of money all up front after Groupon takes their commission. Since many of these deals don't expire for a year, a cash strapped merchant is instantly able to get a nice infusion of cash to operate their biz while deferring their expenses until the vouchers are redeemed.

I do fear though that its only a matter of time before an unscrupulous merchant uses Groupon to run a scam, by issuing an incredible deal, pocketing the cash and then closing their doors.

[lazycash]

Originally Posted by kristin

I asked the spa owner once how Groupon works on their side and she tells me the % and I asked, "is that on the price paid or the price overall?" and she said it all depends how good your negotiating skills are.

Personally I love Groupon but I believe it is hindering brand loyalty and will mess with pricing for all services.

Its not going to introduce any new tactics that merchants haven't already employed for years. How about the store that has a 50% off sale, but marks up their products 30% before the sale to give the consumer a false impression of the extent of their savings. Also, merchants that run incredible deal ads and then use very fine print that limit the deal just so they can get people in the front door. Bottom line, its best to already have a good understanding of the product or service you'll be buying a Groupon for so you can immediately gauge how good of a deal you will be getting, and then make sure to read any exclusions that go with the deal.

[O MARINA]

Originally Posted by kristin

I asked the spa owner once how Groupon works on their side and she tells me the % and I asked, "is that on the price paid or the price overall?" and she said it all depends how good your negotiating skills are.

Personally I love Groupon but I believe it is hindering brand loyalty and will mess with pricing for all services.

It is most definitely on the price paid

also 30% of coupons purchased are never even redeemed.

[$5 submissions]

Groupon's main use for small businesses = publicity and getting the word out. Don't count on it to make actual money off the deals.

[stereolab]

all this sounds like a setup. they are about to go IPO, right? big liquidity events like that make you easy, low-hanging target for lawsuits - especially class action horseshit like this.

[woj]

Originally Posted by KlenTelaris

Aha so it's basically form of advertising.

or you can view it in affiliate program terms too... they pay more than they make, just like the PPS programs... the $$ is made on the "rebills"/ return customers...

[{Psycho}]

Looks like a real scam how cum a big company scam this way

[$5 submissions]

Groupon's still blowing up though

[maxjohan]

groupon?

I don't see their business as something that will stay long term. It's like giving away free porn...doesn't work forever, and the more you giveaway the less you make.