Groupon Promise - Who Takes the Loss?

[AsherO]

http://www.businessweek.com/news/2011-11-23/groupon-shares-plunge-below-ipo-price-3-weeks-after-offering.html

I'm not surprised.

[AsherO]

I'm not surprised.

And the saga goes on...

http://www.forbes.com/sites/ericsavitz/2012/03/30/groupon-finds-accounting-issues-restates-q4-shrs-plunge/
http://www.marketwatch.com/story/branham-law-group-llp-investigating-groupon-for-financial-reporting-failures-2012-03-31

[Drago]

I tried returning a laptop after a month, and they told me that the guarantee on that was fourteen days.
now im fighting w chase, but they also turned me down

[Shmelly]

The Groupon Promise reads:

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?

Groupon absorbs the loss. This is firsthand knowledge as a merchant who ran a deal with Groupon.

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.

I did 70/30 split with Groupon. With other daily deal sites I've pushed as high as 80/20. And I'm not a big company.

[AsherO]

Groupon absorbs the loss. This is firsthand knowledge as a merchant who ran a deal with Groupon.

They no longer offer the Groupon promise.

So, were you satisfied with your Groupon campaign? Would you do it again?

[Shmelly]

The first couple daily deals I did, back in late '09 - early '10, I naively ran at a 50/50 split and got hammered. I break even at a 70/30 revenue split offering a 40% discount. I don't mind breaking even or even losing a bit, as I was driving more eyeballs to a site which is predicated on repeat customers. But what I learned was that the type of customers who come in using daily deal vouchers are not good customers. They'll spend the exact amount of the voucher, not a penny more not a penny less, and never return. So all it ends up is doing is driving up my labor costs to break even on customers who would never return.

After running on 15+ daily deal sites from late '09 -July '11, I haven't done another since. But boy do they harass me.

[AsherO]

The first couple daily deals I did, back in late '09 - early '10, I naively ran at a 50/50 split and got hammered. I break even at a 70/30 revenue split offering a 40% discount. I don't mind breaking even or even losing a bit, as I was driving more eyeballs to a site which is predicated on repeat customers. But what I learned was that the type of customers who come in using daily deal vouchers are not good customers. They'll spend the exact amount of the voucher, not a penny more not a penny less, and never return. So all it ends up is doing is driving up my labor costs to break even on customers who would never return.

After running on 15+ daily deal sites from late '09 -July '11, I haven't done another since. But boy do they harass me.

Sorry to hear.

Typical. This is a DOA business model IMHO. GRPN will only survive by tweaking their model to something sustainable (Goods is one such idea, but that sector is over-saturated).