Groupon crashes and burns

[Stomatopoda]

Originally Posted by The Central Scrutinizer

I suspect restaurants have a far higher markup than most retailers. So even at 50% off, they're still selling above cost.

It depends. Most restaurants have pretty thin margins on some entrees, but ridiculous margins on other items like drinks, sides, desserts, etc. If the coupon doesn't cover the "extra" stuff, and the customer isn't savvy, they could still turn a profit.

[John Albert]

I worked for Groupon for a few weeks, back in 2010. I had just come off a contract position, and a friend of mine who worked there in customer service offered me a job. The pay was extremely low compared with what I was used to making, but I figured it would be a good opportunity to get my foot in the door and possibly transition over into a dev role.

A few things became immediately apparent within my first day working customer service.

For one, the Groupon website had some serious usability issues. Important basic functionality such as reviewing and redeeming one's "groupons" is buried within pop-up menus that aren't even labeled on the main page. In order to access one's groupons, the user is expected to mouse over her own name (?). That's totally counter-intuitive and weird. Lots of customers called for that reason alone, to complain that they couldn't find their groupons. Another cause of confusion was the fact that the site lacks basic email validation. During account creation, no attempt is ever made to ensure that the customer gives Groupon a valid email address. Customers aren't even required to enter their email address twice, in order to prevent typos. That lack of validation meant that lots of angry, confused customers called in, complaining that they're unable to log into their account. In 9 out of 10 cases it was because they'd given an incorrect email address in the first place and the website was too poorly-designed to catch it. Those bad email addresses accounted for something like 30% of all the customer service calls I handled.

Other issues involved the businesses who used Groupon. Some of the biggest complainers were owners of high-end beauty salons and spas. I handled several calls from irate spa owners complaining that the Groupon customers swamped their phones on the first day the deal went on sale, rapidly filling up all their busiest weekend days for months in advance and leaving no slots open for their loyal, regular customers. The customers would also call in asking for refunds because the businesses were not accommodating enough when they tried to make an appointment on a weekend. The owners also regularly complained that the Groupon customers were rude cheapskates who expected everything for free and never left tips. Owners also complained that they never saw the percentage of return business that the Groupon sales reps had promised them.

I even caught a few customers in the act of scamming the company, by creating multiple accounts in order to score numerous instances of extremely popular one-off deals.That problem could have been solved by a simple cross-reference of email addresses and basic name, address, IP addy, and some credit card information. One such customer I dealt with had accumulated over $2500 in clothing discounts from a major retailer, using 25 different email addresses and only 3 different credit card numbers. I discovered her scam when she called in complaining that she'd accidentally misspelled her email address on sign-up, then rattled of like 6 or 7 different addresses, variations on her own name that all had separate Groupon accounts.

Anyway, I met a few of the developers at Groupon, told them I was interested in joining their team, and they asked me how customer service was going. I told them about the usability issues and the security issues and they seemed totally unconcerned. One of them even told me he was aware of the email issue but the business guys were afraid that if people are asked to enter their email twice, they might think twice about joining the website, and it's more important to hook them quick and deal with the customer service problems later.

I was introduced to Groupon's talent acquisition team and after about a week they set me up with an interview for a dev role. The interviewer listened patiently as I ran through my resume, recounted my 10 years' experience in website development. Then she told me that Groupon really doesn't hire developers from within the customer service department, but only draws its talent from the "developer community" (whatever that means). I was told that if I'm interested in working there I should make a point of joining local web developer user groups, network with other devs, maybe start a development-related blog of my own and make a name for myself in the "community." I was astounded. They're not looking for developers, they're looking for wannabe Internet celebrities. I've been working in the industry for over 10 years and never encountered such flat-out arrogance in a job interview.

I continued doing the customer service thing, taking time off here and there for job interviews for about 3 more weeks before I was laid off. I actually ended up getting more money from unemployment than I was being paid for that job, so it was a welcome relief.

I still use Groupon occasionally. Every once in awhile they have some great deals. You've got to be careful not to just buy stuff on impulse though. It is especially good for restaurants and other entertainment-related stuff.

[Eddie Dane]

Originally Posted by John Albert

I was introduced to Groupon's talent acquisition team and after about a week they set me up with an interview for a dev role. The interviewer listened patiently as I ran through my resume, recounted my 10 years' experience in website development. Then she told me that Groupon really doesn't hire developers from within the customer service department, but only draws its talent from the "developer community" (whatever that means). I was told that if I'm interested in working there I should make a point of joining local web developer user groups, network with other devs, maybe start a development-related blog of my own and make a name for myself in the "community." I was astounded. They're not looking for developers, they're looking for wannabe Internet celebrities. I've been working in the industry for over 10 years and never encountered such flat-out arrogance in a job interview.

That.is.just.bizarre.

[Eddie Dane]

Bit of background.

Sorry for the lack of specifics, I'm at work and this is just a quick post.

Groupon is owned by the same company that does Linkedin and mega e-taler Zalando.

They are a web concept company in Berlin, Germany.

Essentially it is owned and operated by two brothers, and financed by a network of Russian Oligarchs and Saudi sheiks and other venture capitalists.

Their MO is as follows:

They watch the market for new website concepts and startups. When they see something with potential they call their financiers and pour a lot of money into copying the concept, but improve it. (startups usually don't have the money or manpower to do this).

Then they create a lot of buzz around the new brand and hope to corner the market in that segment.

[The Central Scrutinizer]

Originally Posted by Eddie Dane

Bit of background.

Sorry for the lack of specifics, I'm at work and this is just a quick post.

Groupon is owned by the same company that does Linkedin and mega e-taler Zalando.

They are a web concept company in Berlin, Germany.

Essentially it is owned and operated by two brothers, and financed by a network of Russian Oligarchs and Saudi sheiks and other venture capitalists.

Their MO is as follows:

They watch the market for new website concepts and startups. When they see something with potential they call their financiers and pour a lot of money into copying the concept, but improve it. (startups usually don't have the money or manpower to do this).

Then they create a lot of buzz around the new brand and hope to corner the market in that segment.

I think you may have them confused with someone else.

[Locknar]

I can see Groupon working for some businesses, like restaurants. We did some wine tastings via Groupon...got us in the door, we had a nice time, and ended up buying the wines we liked.

However, for retail type places...getting them in the door (and selling at a initial loss) only works if they are repeat customers.

[Eddie Dane]

Originally Posted by The Central Scrutinizer

I think you may have them confused with someone else.

Oops.

Looks like your right.

Got this from a guy who actually works at Groupon.

Silly me for not checking.

Disregard.

[spin0]

Could a concept like groupon work as a simple co-op?

[Puppycow]

Originally Posted by spin0

Could a concept like groupon work as a simple co-op?

I don't see why not in theory. In practice, well, that's for the market to decide I guess.

[BenBurch]

Originally Posted by The Central Scrutinizer

I suspect restaurants have a far higher markup than most retailers. So even at 50% off, they're still selling above cost.

The tavern I frequent had a GroupOn for their restaurant fare. They said it was a major hassle, they barely broke even at it, and almost no repeat business. And the day the offer expires, you do no other business, and your regulars get upset at the table wait.

[De_Bunk]

KookBreaker..

I just visited your store website...Looks proper good..

I'm impressed.



DB

[ddt]

Another problem Groupon may have is proper vetting of their merchants.

Recently, the Dutch consumer TV show "Kassa" had an item about a fraudulent valet parking service at Schiphol (Amsterdam Airport) called Schipholparking24.

Various customers had reported problems with that company, with complaints ranging from hundreds of extra miles on the odometer, to a dirty interior, parking tickets and even dents in the car body. The consumer show offered an undercover car with GPS tracker, and it turned out the parking service didn't have their own car park, as they had claimed, but instead shuttled the cars they got between car parks in neighboring business and residential areas - some of which were for permit-holders only. When they wanted to confront the owner, the bird had flown.

What had all the complainants in common? They all had found the fraudulent company through a Groupon offer. The show had a representative from Groupon and a consumer affairs lawyer in the studio. The Groupon representative assured they had taken every care in vetting the merchant (but apparently they had not asked the simple question: "show us your own car park"). The lawyer claimed that Groupon, as the middleman in the sale, was responsible for the buyers' damages as well.

Of course, the law may differ from country to country, and I'm not aware of actual lawsuits being filed yet, much yet decided, but it is an interesting avenue - not only for fraudulent merchants, but also for those cases where the merchant turns out to be unwilling to fulfill their obligations.

[Eddie Dane]

I should note that I have a client who is successful with Groupon.

He has an e-commerce website.

How? He offers via Groupon a 50% discount on on-line vouchers with which you can purchase items in his web store.

The value of the vouchers is such that a client is likely to order a second item.
And I imagine many people forget they have the voucher and never come back.

[kookbreaker]

Originally Posted by De_Bunk

KookBreaker..

I just visited your store website...Looks proper good..

I'm impressed.



DB

Danke!

[kookbreaker]

Originally Posted by BenBurch

The tavern I frequent had a GroupOn for their restaurant fare. They said it was a major hassle, they barely broke even at it, and almost no repeat business. And the day the offer expires, you do no other business, and your regulars get upset at the table wait.

Sounds about right from most of the restaurants around my store. Most of them find that the average Groupon customer isn't the sort they really want as a regular customer. More trouble than they're worth.

[John Albert]

Originally Posted by Eddie Dane

That.is.just.bizarre.

That was before the company had gone public.

[John Albert]

Originally Posted by Puppycow

Originally Posted by spin0

Could a concept like groupon work as a simple co-op?

I don't see why not in theory. In practice, well, that's for the market to decide I guess.

That's how Groupon actually started, as a crowd-source funding site called The Point. People started using The Point to "go in together" on bulk purchases, and that became the inspiration for Groupon.

[John Albert]

Originally Posted by Eddie Dane

Bit of background.

Sorry for the lack of specifics, I'm at work and this is just a quick post.

Groupon is owned by the same company that does Linkedin and mega e-taler Zalando.

Groupon is a public company, GRPN on the NASDAQ.

[kookbreaker]

Adding this in a little late:

Groupon stock crashed some more after a disappointing earnings report.

CEO of Groupon ousted.

Groupon stock goes back up a little bit.

http://www.chicagotribune.com/busine...,7140095.story

[BenBurch]

I give it around a year.