Groupon

June 12, 2011 7:56 PM

Groupon: you're the product.
posted by serazin (81 comments total)

*gasp*
posted by obiwanwasabi at 8:07 PM on June 12, 2011 [17 favorites]

Here is another interesting article on the people behind Groupon: The checkered past of Groupon's chairman
posted by Jasper Friendly Bear at 8:10 PM on June 12, 2011 [6 favorites]

Despite the massive hype and cheerleading, Groupon's fiscal house is far from being in order.
posted by FuturisticDragon at 8:11 PM on June 12, 2011 [1 favorite]

"It's an idea so simple anyone could have thought of it.

I thought low barriers to entry weren't a good thing for a company? I live in a small city, and I know of at least two local Groupon style clones, That $30b valuation just seems completely unreasonable.
posted by PhillC at 8:11 PM on June 12, 2011 [4 favorites]

Groupon's Astonishing Growth, in 1 Chart from the wonderful Planet Money.
posted by selfmedicating at 8:12 PM on June 12, 2011 [1 favorite]

Serious question: Can someone explain to me why a company that's losing a ton of money and has no significant physical assets is supposedly worth $30 billion?

I mean, yeah, there's the userbase, but it's not like a social networking site where there's the network effect making it difficult to switch to a new site. I don't see what's to stop some new company from coming along, doing it better and/or charging the business a lower percentage, and cleaning Groupon's clock.
posted by jcreigh at 8:14 PM on June 12, 2011 [6 favorites]

Well.....yeah.
posted by EmpressCallipygos at 8:16 PM on June 12, 2011

There are already about a dozen Groupon clones, just in the US. Elsewhere it's even crazier. I think they're just part of .com 2.0.
posted by sonic meat machine at 8:18 PM on June 12, 2011 [1 favorite]

Can someone explain to me why a company that's losing a ton of money and has no significant physical assets is supposedly worth $30 billion?

Volume!

No, seriously, I'm pretty sure that's the answer.
posted by Horace Rumpole at 8:20 PM on June 12, 2011 [15 favorites]

Can someone explain to me why a company that's losing a ton of money

In fairness, they've recently spent a lot of money to ramp up in expectations of greater business and profits, so saying "they're losing a ton of money" isn't accurate. They're making a shitload of money; they're just spending more than they earn right now in order to make multiple shitloads.
posted by mightygodking at 8:20 PM on June 12, 2011 [2 favorites]

Groupon Was “The Single Worst Decision I Have Ever Made As A Business Owner”
posted by incessant at 8:21 PM on June 12, 2011 [7 favorites]

Won't anyone stick up for the small buisness owners who are being forced to offer Groupons by ruthless Big Coupon?
posted by nathancaswell at 8:30 PM on June 12, 2011 [4 favorites]

From the comments of incessant's link: the Economist weighed in on Groupon in March.
posted by immlass at 8:32 PM on June 12, 2011

In fairness, they've recently spent a lot of money to ramp up in expectations of greater business and profits, so saying "they're losing a ton of money" isn't accurate. They're making a shitload of money; they're just spending more than they earn right now in order to make multiple shitloads.

Fair enough, as the Planey Money chart that selfmedicating linked to shows, they had a revenue of $44.2 million and a profit of $8 million in Q1 2010, and a revenue of $644.7 million and a loss of $146.5 million in Q1 2011. So they used to actually be profitable, and they're still pulling in a ton of money, just not enough to actually cover expenses recently.

But here's the part that I don't get: Normally, when you burn through cash like that, you're building up something that you think will give you an edge in the future, in hopes of earning the money back later. What is Groupon building up? What can we genuinely say they are investing in? To me, it seems like the low barrier to entry in this market will be fatal to them.

I don't know enough about the machinations of Wall Street and high finance to know if this is reasonable suspicion, but I tend to think that they only thing they're trying to optimize for is growth, at whatever the cost, so that after a bubble-y IPO, they can cash out their personal share and walk away from the wreckage.
posted by jcreigh at 8:39 PM on June 12, 2011 [7 favorites]

Soylent Groupon is made of people!?
posted by nightchrome at 8:39 PM on June 12, 2011 [9 favorites]

There's a very popular Groupon clone where I live. 90% of the deals are absolute crap that nobody buys. The other 10% sell like crazy, and are usually food-related or some other kind of necessity. I've cherry-picked the best stuff...and fully expect this fad to collapse in on itself once local businesses figure out they're not getting long-term customers.
posted by aerotive at 8:39 PM on June 12, 2011 [1 favorite]

The business owner from my link takes full responsibility for her bad business decision, but at some point, Groupon's salesforce will have burned through all the naive business owners in a town and will have to start offering better percentages for the businesses. I feel as though it's an unsustainable business model, but hey, what do I know?
posted by incessant at 8:43 PM on June 12, 2011 [2 favorites]

What makes Groupon really stand out, however, are its margins. It typically charges businesses half of the discounted price of a voucher. Venture capitalists say they have never seen such impressive numbers. This goes a long way towards explaining why the start-up was able to raise a whopping $1.1 billion in financing and why, in December, Google was willing to pay an even more astounding $6 billion for it.
posted by KokuRyu at 8:47 PM on June 12, 2011

What is Groupon building up?

Relationships with businesses? A sufficient buyer-side customer base to ensure that most groupons meet their targets quickly? Inhouse expertise in choosing discounts that maximize profit? IPO-and-cash-out seems plausible too, of course…
posted by hattifattener at 8:47 PM on June 12, 2011 [1 favorite]

Daily Candy worth $130 million with unique email newsletter model
posted by benzenedream at 8:49 PM on June 12, 2011 [1 favorite]

I had no idea Groupon was taking 50% of the discounted sale price. That's crazy.
posted by mediareport at 8:56 PM on June 12, 2011 [1 favorite]

"Google was willing to pay an even more astounding $6 billion for it."

And I suspect that in the future, Groupon will look back on refusing to sell to Google as a bad, bad, bad decision.

This article talks about their "deteriorating" business model:

While Groupon is experiencing rapid revenue growth, we believe operating margins are declining because, as we’ve shown above:

Revenue per Groupon customer is declining
Cost to acquire those customers are increasing
Sales costs are increasing as it needs to run smaller deals with more merchants to personalize the experience

Honestly the hyper-local guys get more interesting deals from places I actually might want to go to, and their margins are a lot lower. Plus the PennySaver still comes in the mail once a month with lots of "buy one/get one" entrees at places I'm actually interested in eating. Even without the "deteriorating" business model, I'm very unclear on how Groupon will compete in smaller markets against local players with low margins and better local knowledge and connections. There is power in the Groupon brand name, but when you're dealing with local people running a local site, that seems to be offset, especially since in a lot of smaller markets, the local guys may get there before Groupon. (And with so many big companies entering the same space, Groupon is getting diluted even before local competitors.)
posted by Eyebrows McGee at 8:58 PM on June 12, 2011 [1 favorite]

Groupon, like Amazon, grew using nearly free money. One moat they Amazon had at the time, and Groupon may have now, is that when VC money gets tight, their competitors will not be able to afford to spend their way to the front.
posted by zippy at 8:59 PM on June 12, 2011 [3 favorites]

Also, Google's deal may have been predicated on due dilligence that Groupon did not wish to deal with. I have no knowledge of the deal aside from the mention here, but when a large successful company makes an offer for a startup, there are typically lots of conditions on the deal. A rumored offer of X dollars is not the same as a done deal at X dollars.
posted by zippy at 9:03 PM on June 12, 2011 [1 favorite]

As a consumer, I've only ever bought one Groupon. I'd buy more, but they don't seem to be selling what I want. This makes me suspect that their business model will not be profitable. I just hope I get a few more VC-funded meals out of it before the markets realize the same thing.
posted by anotherpanacea at 9:04 PM on June 12, 2011 [4 favorites]

Man, next you'll tell me that Woot is just being fashionably cynical in its daily offers and that they're just playing on my sense of humor to buy stuff I don't need.
posted by Horselover Phattie at 9:04 PM on June 12, 2011 [2 favorites]

I've wondered if they're going to start running out of local businesses in mid-sized cities like where I live. There are only so many restaurants and nail places, and new ones aren't being added quickly enough to keep up once they've burned through all the interested merchants once. I anticipate a gradual shift to more and more "national deals", which tend to be way less interesting to me.

They should've taken the 6b.
posted by purenitrous at 9:12 PM on June 12, 2011 [1 favorite]

What's Groupon doing that leads to quarterly expenditures of $790M?
posted by aaronetc at 9:14 PM on June 12, 2011

They have reason to be happy: Groupon in the US has an "open vacation policy", meaning that employees can take as much holiday as they wish provided their work targets are met.

Dear "The Press",

Please stop writing about this type of vacation policy like it's a good thing. I means that in practice most employees simply never go on vacation. It's done to prevent the company from accruing a debit on their balance sheets for unused employee vacation time. It is, in a word, bullshit.
posted by GuyZero at 9:18 PM on June 12, 2011 [90 favorites]

It's interesting to see how all these daily deal sites will play out. Looking at lifesta (which seems to be the stubhub of daily deal sites) you can see people just trying to dump off the deals they bought for a few bucks as well as people trying to sell their deals for MORE than what they originally paid for them. That makes 3 sets of sellers all trying to make a buck off the original business owner's attempt to bring in more customers.
posted by Salmonberry at 9:19 PM on June 12, 2011 [1 favorite]

In competitive markets, I'm guessing that Groupon no longer takes anywhere near 50%, given that their competitors all distinguish themselves by taking less.

Here in DC, the (unsurprisingly DC-based) LivingSocial is vastly more popular. Their key selling point seems to be being less shady than Groupon. My guess is that the online coupon business will very quickly drop down to one or two sites in each major market, and that Groupon's expensive house of cards will very quickly collapse to local competitors.
posted by schmod at 9:19 PM on June 12, 2011

Why I Want Google Offers And The Entire Daily Deals Business To Die.
posted by weston at 9:23 PM on June 12, 2011 [8 favorites]

What is Groupon building up? What can we genuinely say they are investing in? To me, it seems like the low barrier to entry in this market will be fatal to them.

They're building a customer network and gaining first mover advantage. That's the textbook reason. But there are some additional reasons unique to information economics.

Another thing keeping people on Groupon is their set of purchased coupons. I've got about a dozen, and everytime one is near expiring, or sooner, I'll go to the site or mobile app to print it out or whatever. Once I'm there, there's another chance to hook me on another deal.

Finally, they're building a huge database of individual preferences, which they can use to better target users. Amazon is great in part because of its recommender system, which is built on a ton of customer data. They can use this preference database when selling their services to retailers and vendors. Eventually, they'll be able to counteract the "worst decision ever" stories by saying, "We know your customers better than you do, and we know of other customers who are exactly like your customers. Let us bring them to you."
posted by formless at 9:27 PM on June 12, 2011 [1 favorite]

Business models aside, the daily deal movement is a hideous iteration of the consumptive economy.

These daily deals remove all factors from the normal decision making process when making a purchase (where does this product come from? what is it made of? what else is this company involved in? am I contributing to the local economy or some faceless conglomerate? is this product beneficial for me or my environment?) and replace all that with CHEAP CHEAP BUY NOW QUICK HURRY UP BUY NOW.

Consumers have a responsibility to behave with prudence, the marketplace has a responsibility to not make it difficult to do so.
posted by mhjb at 9:43 PM on June 12, 2011 [5 favorites]

Consumers have a responsibility to behave with prudence

I don't buy that.
posted by weapons-grade pandemonium at 9:49 PM on June 12, 2011 [4 favorites]

I've only bought two Groupons, but both were for things I needed --or was going to buy anyway. I know young, social sorts who get the Groupon food deals a lot. Both of the businesses I Grouponed seemed perfectly happy with their experience, and one of them has re-upped and done a second Groupon already. Their take was they were only getting 50%, yes. But 50% of a huge chunk they would otherwise not have seen. Seems perfectly sustainable to me.
posted by umberto at 9:53 PM on June 12, 2011

Consumers have a responsibility to behave with prudence, the marketplace has a responsibility to not make it difficult to do so.

There's a saying in philosophy, you can't derive an ought from an is. You seem to be attempting to derive an is from an ought, and I don't think that's going to work either. The marketplace is amoral. One may find this regrettable, but no matter how hard you feel regret in its general direction it will not change its essential nature.
posted by Diablevert at 9:53 PM on June 12, 2011 [5 favorites]

CHEAP CHEAP BUY NOW QUICK HURRY UP BUY NOW.

Daily deal sites heavily integrate game mechanics like countdowns and time limits to drive customers. If you want to see an extreme version of it, look at the new site OO.com which includes additional mechanics like points, achievement deals "unlocked" after a certain number of points are reached, etc.

I'm sure the integration of "gamification", another loathed buzzword, and daily deals will be sure to please many people.
posted by formless at 9:54 PM on June 12, 2011 [2 favorites]

Seems perfectly sustainable to me.

Depends. There's some interesting analysis here suggesting that Groupon is not sustaining revenue per customer in at least one of its established markets. One possible reading of that is that as groupon enters a market there's a wave of hardcore early adopters who are super in love with the concept and then a second, larger wave of "hey, neat, let's check it out" folks, but that over time the interest level drops.

Maybe Boston's an outlier for some reason, but if it is so that the interest level of the average user fades over time --- if the Groupon email becomes just another bit of bacon you delete without even reading, six months in --- then I do think they have a serious problem, regardless of whether or not they can maintain relationships with the business owners. There's a certain faddish flavor to their skyrocket rise which inclines me to think this might be so, but my opinion probably ought not to be trusted in this matter since I haven't signed on and don't plan to.
posted by Diablevert at 10:01 PM on June 12, 2011 [2 favorites]

The marketplace is amoral.

And look where that's got us! There are alternatives to free market capitalism yknow...
posted by mhjb at 10:03 PM on June 12, 2011

In a fine display of post-modern irony based web 2.0 business management skills, Groupon CEO Andrew Mason flubs a legitimate question regarding Groupon's ability to penetrate into markets such as Germany given their already low profit margins (perhaps even hinting at a complete ignorance of the notion of profit margins), but then proceeds to give a *action-jackson font* quirky *action-jacskon font* rendition of his vision for a new company which allows users to shoot zombies in Las Vegas casinos with paint-ball guns (48 minute mark of embedded video).
posted by FuturisticDragon at 10:04 PM on June 12, 2011 [1 favorite]

Anyone remember Letsbuyit.com? Similar concept, went down in flames during the previous dotcom boom...
posted by dagny at 10:13 PM on June 12, 2011 [1 favorite]

There seems to be a lot of room for improvement at Groupon. I could really do without the selection of nail salons and day spas at least three times a week.
posted by secondhand pho at 10:27 PM on June 12, 2011

What is Groupon building up?

The insider response seems to be "the best sales organization you've ever seen." But I struggle to see how that justifies a 30bn valuation with their current product offerings, and adding some non-coupon product diversification may be difficult with a name like "Groupon."

My money's also on Bubble 2.0.
posted by chundo at 10:27 PM on June 12, 2011

Money, as we know it, just keeps getting more and more meaningless.
posted by philip-random at 11:14 PM on June 12, 2011 [1 favorite]

Tell that to my landlord, philip-random…
posted by hattifattener at 11:26 PM on June 12, 2011 [3 favorites]

I've give money to Groupon (and Livingsocial) more than a few times, but when I heard Google was supposedly offering them 6 billion for the company my bullshit detectors started going off big time. Now they're supposedly worth 30 billion but I agree with most of you thinking it's all an illusion. This is a business with zero barrier to entry and zero moat, and Groupon may survive and even make a ton of money, but it's not worth 30 billion, and Google can and will replicate what Groupon has done for a fraction of that 6 billion. Hell just one absurdly good deal that gets spread around would probably net you at least a million signups in a few days, and wouldn't cost as much as an ad spend would have.
posted by haveanicesummer at 12:02 AM on June 13, 2011

Pets.com 2.0?
posted by jrochest at 12:20 AM on June 13, 2011

1. Not sure what it's like in other places but the copywriting on the SF Groupon emails I (used to) get was among the worst I have ever read. Always trying to be clever but failing over and over and over again.

2. Groupon's expenses are high relative to revenue because it remits half of it's cash back to the businesses featured. $500 mil. in means $250 mil. out.
posted by wemayfreeze at 12:27 AM on June 13, 2011

Ooh. A new circle jerk for money-grubbers. Be still, my beating heart.
posted by Decani at 1:28 AM on June 13, 2011 [5 favorites]

I was at Google when the acquisition rumor was floating around. Everyone seemed pretty pissed off at the idea. The feeling was that Groupon had built an army of local sales people, but didn't have much value beyond that. (I should stress that nobody I talked to had any non-public information about the deal.)
posted by ryanrs at 2:17 AM on June 13, 2011 [1 favorite]

I'm excited to have learned the term "moats" when applied to business strategy. Yay! Also, Bubble 2.0 LOLBBQ.
posted by cavalier at 2:58 AM on June 13, 2011 [1 favorite]

Some skepticism amongst analysts.
From the FT piece A study by Utpal Dholakia of Rice University last year found that 42 per cent of merchants who had sold group discounts to Groupon’s 16m “cumulative customers” (only a fifth of its 83m registered “subscribers” have paid for a “groupon”) would not do so again.
posted by SyntacticSugar at 3:18 AM on June 13, 2011 [3 favorites]

Don't forget that Groupon is also in the information biz.

I finally went to check out Groupon a couple of days ago, just to see if I could form my own impression. (My wife's company recently used a Groupon deal, and it was, well and truly a clusterfuck of epic proportions.)

I found that I couldn't see anything on their site without first supplying my email address. Fuck that. I will never,never,never do business with a company that operates that way.
posted by Benny Andajetz at 4:50 AM on June 13, 2011 [6 favorites]

What's Groupon doing that leads to quarterly expenditures of $790M?

Paying-off their early investors.
posted by Thorzdad at 5:05 AM on June 13, 2011 [3 favorites]

"Off the record, moreover, businesses that have done deals through Groupon suggest that the savings can be borderline fictional: a £50 deal for, say, a group fitness course that's usually "worth £150" isn't quite the same as saying it usually sells for £150, a claim that is strictly regulated in the UK. Indeed, the specific course may not have existed until it was created for the purposes of offering a deal through Groupon."

This is interesting as internet advertising is now being regulated by the ASA, the same body who handles complaints against TV, radio and print. I work in pre-clearance for UK TV and we would require a signed statement making clear that the RRP ('worth') would have been charged for a minimum period of 28 days during the past six months. They're already having words with Groupon. It's a difficult business model - if your success depends on impulse purchasing, and people begin to feel that research needs doing to avoid potentially getting ripped off or mis-sold to, then you lose sales.
posted by mippy at 5:08 AM on June 13, 2011 [2 favorites]

Having said that, I wished I did use it when I noticed Whipstitch Fabrics had a Groupon deal. Not that I need an incentive to purchase more fabric.

We've also got Wowcher and KGBdeals here (or at least in London).
posted by mippy at 5:09 AM on June 13, 2011

SyntacticSugar's 2nd link is to a scathing Financial Times piece. It's worth a full read but a couple of key bits:

Groupon is at a loss to justify itself

...Groupon’s IPO is disquieting. The company’s filing is filled with unsettling details about its business model, how much money it is spending to sustain its explosive growth and its accounting methods. Its early investors are seeking another infusion of cash, having allocated most of an earlier $1.1bn in fundraising to themselves.

...Groupon has attempted to comfort investors with its own measure of profitability known as “adjusted consolidated segment operating income” or “adjusted CSOI”, which ignores acquisition and online marketing – much of the expense of achieving all this growth. But that is transparently nonsensical. Without the marketing to find new prospects, it would grind to a halt.

...Mr Lefkofsky this week appeared to breach the SEC-enforced “quiet period” for IPOs by insisting to Bloomberg that Groupon would be “wildly profitable”. Barron’s reported that Mr Lefkofsky told employees of another of his businesses in 2001 to be “wildly positive in our forecasts” before it went bankrupt.

...The founders have already shown their brilliance by extracting half a billion dollars from an unprofitable start-up with an unproven business model. That’s not funny.
posted by mediareport at 5:38 AM on June 13, 2011 [4 favorites]

For those interested in the positive side of coupon economics, check out planet money's bit on price discrimination.
posted by a robot made out of meat at 5:43 AM on June 13, 2011

It seems to me that the supply of small business willing to participate in these offers has got to dry up eventually. It's hard to tell what portion of these business are happy with the experience, but many of them clearly are not. There are only so many loss-leaders that a small business can offer, and with Groupon and so many other clones pushing them so hard, I'll bet this scheme is going to come crashing down sooner rather than later.

Groupon's accounting practices are bizarre; I don't understand how the supposedly professional financial markets let companies get away with this kind of stuff.

See also: Groupon IPO: Pass on this deal
posted by sriracha at 5:49 AM on June 13, 2011

"large-limbed"?

The glorious technology future belongs to those with robust frames, apparently.
posted by clvrmnky at 5:58 AM on June 13, 2011

Okay, in sum:

1. Former cloudheaded idealist realizes hawking coupons pays his rent better than thinking about "big ideas."

2. Cloudhead teams up with Dubious Entrepreneur Type to help build his "enlightened experience" business model.

3. Cloudhead uses new Cloudhead(tm) Accounting practices, where typical operating expenses are now In The Clouds(tm) prior to releasing IPO, which is still ranked as "epic" despite very visible cracks in the foundation in the concept of "enlightened experience" business model.

4. Rest of the business world reacts with understandable confusion (tinged with visible jealousy) about ITC Accounting method.

5. Meanwhile, in the field, small business owners, sign up for this on vague word-of-mouth from neighboring busineses. Chaos ensues.

6. Joe Consumer says, "um, another nail salon deal? DELETE."

Thank you all for coming and please pass by the merch table on your way out.
posted by Lipstick Thespian at 6:35 AM on June 13, 2011 [3 favorites]

What's Groupon doing that leads to quarterly expenditures of $790M?

Paying-off their early investors.



Getting in early on pump and dump schemes of companies with massive pr machines was the way most sophisticated investors madoff with tons of money during the original dotcom bubble, those with short memories tend to make short fortunes...
posted by any major dude at 6:47 AM on June 13, 2011 [1 favorite]

1. Pump!
2. ?
3. Profit! (for some)

Answer left as en exercise to the reader.
posted by seanmpuckett at 6:48 AM on June 13, 2011

Interesting article. Good thing they checked off the "describe the unkempt nature of interviewee" requirement for all journalism involving entrepreneurs.
posted by odinsdream at 7:00 AM on June 13, 2011

Groupon Is a Straight-Up Ponzi Scheme.

But I'll take some half-off 50$ artisan cupcakes for 25$, sure, why not, my girlfriend has a birthday coming up. Just don't expect me to ever pay the full $50 for fucking cupcakes. Groupon, bringing down the price of over-hyped hispter fads since 2009.

Oh...no...I think I'll pass on 25% off laser hair removal...thanks though, I guess.
posted by T.D. Strange at 7:44 AM on June 13, 2011

the way most sophisticated investors madoff with tons of money during the original dotcom bubble

Have one on me, no Groupon required.
posted by Uther Bentrazor at 7:57 AM on June 13, 2011 [1 favorite]

The marketplace is amoral.

The people whose activities collectively create the market, particularly those connected to immoral business practices, would sure like you to think so.

Next thing you'll be saying that corporations are amoral, too, or that mutual funds are all amoral (or morally equivalent to each other) as well.

The point of The Point, immodestly, was "to solve the world's unsolvable problems", harnessing the collective potential of the internet to lobby for social justice.

It's particularly sad that a founder (if you believe what he says) originally setting out to work the power of teh Web for social justice has dedicated his efforts to getting deals on luxury items for those who can easily afford to pay full price. (Unless Andrew Mason's definition of "social justice" is restaurant bargains for college students.)

"I look at being a capitalist businessperson like riding a bike – if I go too slowly, I'll fall over. Or it's kind of like a shark: if I stop swimming, I'll just die."

Yup. Never slow down to consider what you're doing. Hey, if he swims hard enough, Mason might get himself invited to the Bilderberg Group meeting one of these years!
posted by aught at 8:17 AM on June 13, 2011 [1 favorite]

If you can't get to that FT article, just google "Groupon is at a loss to justify itself" and click from there.
posted by mediareport at 8:39 AM on June 13, 2011

The feeling was that Groupon had built an army of local sales people, but didn't have much value beyond that.

More like an army of Ron Popeils, but basically this.
posted by Civil_Disobedient at 9:44 AM on June 13, 2011

It's a difficult business model - if your success depends on impulse purchasing, and people begin to feel that research needs doing to avoid potentially getting ripped off or mis-sold to, then you lose sales.

Having recently been burnt on a bad Travelocity deal through would-be competitor HomeRun (which *reads* like 50% off on hotels through Travelocity, but in fact turns out to be $50 off of purchases of $250 or more, and is only redeemable at an alternate version of the Travelocity site which is of course missing their better bargains), I can testify that research is absolutely necessary. Some of the deals that go through these sites are great, but there are enough which are deceptive or terrible that "buyer beware" is definitely still the basic rule.
posted by weston at 10:02 AM on June 13, 2011

1. Pump!
2. ? Pump up the jam. Pump it up while your feet are stompin' and the jam is pumpin'. Look at here the crowd is jumpin'.
3. Profit! (for some Technotronic)

Answer left as en exercise to the reader.
posted by zippy at 10:20 AM on June 13, 2011 [2 favorites]

Groupon's accounting method questioned by The New York Times.

To quote The Who "It's a put on."
posted by Gankmore at 10:59 AM on June 13, 2011

We recently had to get our money back on a Groupon deal for a driving service to the airport. The purchase cost was about $65 if I remember. Once we tried to redeem it however they tried to charge us an extra $50 or so for "parking and fuel costs" despite there being no parking involved in the transportation they would be providing us.
posted by haveanicesummer at 11:20 AM on June 13, 2011

400 ad-copy writers and editors in Chicago alone? Good god. If it takes that many writers to come up with the cutesy non-sequitur drivel they use to describe the deals, they're doing it wrong. And I say this as an occasional Groupon purchaser who has only had good experiences, but lord do I hate those descriptions...
posted by janerica at 11:38 AM on June 13, 2011 [1 favorite]

I hope the war of the groupon-clones is ultimately won on the quality of the copy.
posted by Dragonness at 11:59 AM on June 13, 2011 [3 favorites]

I might have missed this being answered in the article, but:

How the fuck did Groupon spend HALF A BILLION FUCKING DOLLARS?
posted by empath at 1:10 PM on June 13, 2011

We bought a GroupOn for an "oil change and car detailing". The fine print said "appointment required" and when we tried to make an appointment they told us "you can only come on saturdays between 10am and 1pm, no appointment, first come first server, and we're full for the next three weeks".

Good times!
posted by blue_beetle at 2:32 PM on June 13, 2011 [1 favorite]

I honestly never understood the appeal of getting a deal on something you neither want nor need.

Business models aside, the daily deal movement is a hideous iteration of the consumptive economy.

But that's probably what really burns me.

Groupon's Astonishing Growth, in 1 Chart from the wonderful Planet Money.

... ... ... there are 4 charts!

The marketplace is amoral.

A free market might be amoral (actuall, I don't believe that either), but a centralized market with strong government direction (subsidies, tax breaks, tax incentives) is not.

Some of the deals that go through these sites are great, but there are enough which are deceptive or terrible that "buyer beware" "ignore them completely" is definitely still the basic rule.

Also, Pump Up the Jam (c'mon, bold with no link?!)
posted by mrgrimm at 3:10 PM on June 13, 2011 [1 favorite]

The problem with Groupon is that they are incredibly reliant on small local companies that are potentially incredibly flakey.

Case in point:

A friend of mine bought a £139 spa day Groupon in London in December for £39. She rang the spa to book, and was told that the first available slot was in May.

Fast forward to May. Two days before the appointment the spa contacted her to say that her appointment had been postponed 'due to unforeseen circumstances'. She then did some digging, and found *loads* of bad reviews for the spa by searching for the name +Groupon on Google.

She rang up to get her money back. The person from Groupon said "Is this about [Spa]? We've got a colleague dealing with the complaints about them".

So what happened? Was the Spa just unreliable? Or did they get people willing to pay £139, and then bump the Groupon users at short notice? If so, and the businesses are starting to look at Groupon users as second class customers (& I can see why they would - they get next to no revenue on them) then the whole thing just falls apart.

Groupon can't possibly do full due diligence on the businesses that they partner with. & that's why they can't possibly be worth $30bn or even $1bn.

(The story ended ok - my friend got her £39 back. But she won't be using Groupon again)
posted by DanCall at 12:58 AM on June 14, 2011

Groupon is a real business; and, although they have a couple dozen competitors now, this business is not without barriers to entry. Groupon has hundreds of 'boots on the ground' in major cities (and still hiring aggressively) for face-to-face meetings and deal coordination with merchants -- two guys in a garage with a website can't effectively compete with that.

Several clients of our Austin online marketing company have tried Groupon, with mixed results. The ones who were successful structured the deals to eliminate the 'worst case scenarios' (overcrowding, stockouts, negative margins) and taken the initiative to engage the customer when they arrive at the store -- collecting evaluations and contact info for future offers and other communications. That's the real value of Groupon.
posted by SemanticAd at 2:53 PM on June 23, 2011