Author Topic: Groupon Promise - Who Takes the Loss? (Read 5428 times)

AsherO · « **on:** June 07, 2011, 12:37:13 AM »

The Groupon Promise reads:

Quote

Groupon Promise: Nothing is more important to us than treating our customers well. If you ever feel like Groupon let you down, give us a call and we’ll return your purchase – simple as that.

If I get a refund from Groupon, do they absorb the loss, or do they pass it onto the merchant?

What do you think and why do you think so?

elikay · « **Reply #1 on:** June 07, 2011, 01:55:19 AM »

My guess is that it depends, if the complaints are below a certain threshold, it is absorbed as an operating expense. But if too many complaints are received they then go after the merchant (good chance it would end up in court).

AsherO · « **Reply #2 on:** June 07, 2011, 02:06:14 AM »

Quote from: elikay on June 07, 2011, 01:55:19 AM

My guess is that it depends, if the complaints are below a certain threshold, it is absorbed as an operating expense. But if too many complaints are received they then go after the merchant (good chance it would end up in court).

Makes sense. Anyone else want to take a shot at this one please?

smurf · « **Reply #3 on:** June 07, 2011, 02:18:50 AM »

If you haven't redeemed it yet, then within a certain time-frame I would guess groupon justs voids the sale and never pays the merchant their share.

AsherO · « **Reply #4 on:** June 07, 2011, 02:25:20 AM »

Quote from: smurf on June 07, 2011, 02:18:50 AM

If you haven't redeemed it yet, then within a certain time-frame I would guess groupon justs voids the sale and never pays the merchant their share.

What if I redeem it with the knowledge I might not be satisfied. I don't want the Jewish merchant to lose money...

Avid Reader · « **Reply #5 on:** June 07, 2011, 02:47:57 AM »

Like elikay, I think as long as there aren't too many complaints, Grouoon eats the lose themselves.
Your second question is more complicated though...

AsherO · « **Reply #6 on:** June 07, 2011, 03:25:15 AM »

Quote from: Avid Reader on June 07, 2011, 02:47:57 AM

Your second question is more complicated though...

If the merchant isn't losing money, I don't mind. This unsustainable business model can afford it.

elikay · « **Reply #7 on:** June 07, 2011, 08:12:58 AM »

Now that you bring it up... I did spend some time searching for hard evidence. I did not come up with anything, but I did see some very pessimistic articles about Groupon. One person did the math that on a $40 for 80 groupon the merchant ends up with less than 25 cents on the dollar! It would be cheaper to just give away 20 dollar store credits, and presumably more effective.
In addition they're not terribly professional when it comes to posting and more importantly, correcting the deals.

Dan · « **Reply #8 on:** June 07, 2011, 09:54:51 AM »

Quote from: elikay on June 07, 2011, 08:12:58 AM

One person did the math that on a $40 for 80 groupon the merchant ends up with less than 25 cents on the dollar!

How's that?

smurf · « **Reply #9 on:** June 07, 2011, 10:41:46 AM »

Quote from: Dan on June 07, 2011, 09:54:51 AM

How's that?

For example in the B&N deal it was $10 for $20 dollars. Of the $10 groupon only gives bn 5 leaving them with $5 on a $20 cert

Dan · « **Reply #10 on:** June 07, 2011, 11:32:24 AM »

Quote from: smurf on June 07, 2011, 10:41:46 AM

For example in the B&N deal it was $10 for $20 dollars. Of the $10 groupon only gives bn 5 leaving them with $5 on a $20 cert

Most companies these days get a better split than that. I think big companies get 70% or so.
Also you're assuming that the customer spends exactly $20 in that case.

elikay · « **Reply #11 on:** June 07, 2011, 11:49:06 AM »

Groupon is generally for small businesses and they get 50% minus fees. That doesn't mean its not worth it, but definitely some number crunching must be done in each specific business before jumping on the bandwagon.

Yungerman · « **Reply #12 on:** June 07, 2011, 04:32:02 PM »

This article explains very well how groupon works: http://vator.tv/news/2011-06-06-how-does-groupon-work

In short: The reason companies are giving a 75% discount on services is because they are being advertised on Groupon and assume a loyal customer following