Groupon? Don’t Buy It

I'm also waiting for the Groupon house of cards to fall. It should be interesting to see if they allow someone to acquire them before it happens. Until then, I'm not supporting Groupon (or any similar coupon deal) in any way, shape, or form. The 75% discount they require (50% discount and they take 50% of that) is insulting and often damaging to business owners.

I'm Editor-in-Chief at another group buying website (which I won't mention here to maintain the integrity of my comment), so I do an incredible amount of research into Groupon and other group buying websites. From a big-picture perspective, it's obvious Groupon only cares about Groupon and not the businesses it serves. Their deal descriptions, for example, must contain three jokes at particular points in the write-up, regardless of whether the situation/deal calls for it. And Groupon allows the business little to no input as to what goes into the description. People have described Groupon's merchant agreement as incredibly lopsided in favor of Groupon, but I would argue that their contract is only a concrete example of a larger, more abstract company philosophy: represent the Groupon brand on the backs and in favor of the brand of the business. Businesses are generally pretty terrible at marketing themselves; why not help them find their own voice instead of assuming your's is the better one. In short, Groupon needs to put the businesses first and get over itself.

You do read a lot! Thanks for reading - and the mention. :)

Jeff

The problem I see with Groupon is that it works very well for stable small companies who have the budget, staff and inventory to handle or outsource a huge loss-leading bump in demand, but not all small businesses.

Because of that, people are taking the successes and blowing them way out of proportion. The failures get ignored or seen as isolated incidents.

Any small business, association or non-profit that has tight budgets or thin margins should beware. Like you said, do your homework.

I actually thought the ASAE article did an ok job of recommending tips to associations and nonprofits who are considering participation in a group buying deal.

Yes, Groupon's merchant agreement isn't crystal clear and it's skewed towards Groupon's favor which is unfortunate but it's not difficult to look up "Groupon Merchant Agreement" and find a slew of articles that breakdown the jargon like this one (http://www.businessinsider.com/teardown-of-the-groupon-merchant-agreement-2011-6) or this one (http://www.quora.com/Rakesh-Agrawal-2/Analysis-of-the-Groupon-merchant-agreement).

Additionally, it appears to me that a lot of Groupon horror stories come from businesses that sell a product and not a membership or an education program. For businesses that sell a product they're discounting a physical item that costs them money, for associations or nonprofits we already deeply discount membership to students, retirees and (sometimes) professionals in transition. If your association or nonprofit can successfully navigate the legalese and afford to handle an influx of discounted members, why not take a chance on bringing in new members or session participants?

I haven't really done anything much with Groupon, but I just read this story in Vanity Fair about its founder/philosophy, which was pretty illuminating: http://vnty.fr/ooFN89