

GroupOn, LivingSocial engaging in questionable practices - benwerd
http://techcrunch.com/2011/02/11/valentines-day-bait-switch-groupon-must-avoid-becoming-just-another-useless-coupon-site/#comment-144671358

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portman
FYI, this is a link to a _comment_ , not to the story.

It can sometimes take 20+ seconds to load the comments, so here it is for
anyone who is having trouble:

 _"when groupon called me and wanted to run a<http://socialprintshop.com>
deal, their sales rep basically told me to double the price of my product for
a month to make things work for me giving a 50% off deal. Living Social did
the exact same thing, as did another deal site that reached out to me. Living
social only required me to lower the price for 1 week after the deal ended."_

\-- benjaminlotan

~~~
benjaminlotan
wow, that's my comment thanks for posting to HN.

~~~
pitdesi
Can you tell us details of how this has impacted visits to your site and the
conversions? Random curiosity, nothing else. It would be cool if that comment
made you a lot of money/buzz etc.

~~~
benjaminlotan
300% increase in visits on the day of this. generally nice for spreading some
awareness. A few more orders than normal, but nothing insane. very cool for a
comment to receive attention though. Makes me want to comment on more articles
wherever i find them.

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maukdaddy
This should come as no surprise to anyone who has a business background or has
ever worked in retail.

I have no doubt their business will continue to be successful, as b&m stores
are, but I have serious doubt about their sustained growth prospects as the
newness of their model wears off. At some point Groupon is going to have to
rely on the same sleazy sales tactics as b&m stores, which will turn off a
majority of the early adopters.

~~~
travisp
Even retail stores are somewhat limited in their ability to do this (not that
some don't do it anyway).

As stated, it would seem to run counter to FTC section 233:

<http://www.ftc.gov/bcp/guides/decptprc.htm>

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barista
The fact that Groupon has to engage in such tactictss goes to show that they
are hitting the limits.

IMO they were idiots not to take the GOOG offer. It was a huge one and I doubt
they will ever reach that valuation again. Discounts like gropon never work I
don't know many people who have give n the business a consistenty repeat
busiinessafter going there first using a groupon.

The growth is staggering but not sustainable.

~~~
anamax
> IMO they were idiots not to take the GOOG offer. It was a huge one and I
> doubt they will ever reach that valuation again.

You're assuming that money is the only thing that counts for them.

~~~
trotsky
They're just in it for the social benefit of revolutionizing the day spa
customer acquisition game?

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anamax
Or, they'd rather be in charge at a small company than a property manager at
Google.

~~~
akgerber
It's not hard to build another small company when you're incredibly rich.

~~~
nazgulnarsil
it's _harder_ to build a profitable company when you're rich. instead of
solving problems you'll be tempted to throw money at them.

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systemtrigger
A Sr VP of a well-known sports equipment brand told me he was planning to
create a new product for the sole purpose of selling it on Groupon - in order
to maximize his profit margin. The product will be virtually identical to a
competing product in his line.

~~~
garply
I run a b&m store and this is common behavior. A store re-arranges an existing
product so that it looks a little different, puts it up as a premium product
with a very high price and for limited-time only, then offers that item, and
only that item, for a Groupon.

~~~
llimllib
What does b&m stand for?

edit: brick and mortar, the googles say

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webXL
Well, they're making it up to me:

 _Hi Matthew,

Thanks for your interest in the FTD Groupon.

We try to offer the best deals possible, while also making sure all of the
details are up front and easy to understand. The deal’s original terms were
that the Groupon could not be combined with other offers and discounts. For
sale items on FTD.com, this meant that you were not able to realize both
discounts. We understand that is confusing and upsetting to a number of
people—especially since you expect a great deal from us every time.

To make this right, we’ve worked together with FTD to make sure that discounts
available on FTD.com will now also be available to use with your Groupon. For
those of you who already purchased items that were on sale on FTD.com, FTD
will automatically issue you a refund on the credit card you used with the
difference as additional savings. Please allow 5-7 business days for this to
show on your statement.

We’re really sorry for any confusion this deal has caused. This resolution
should now ensure that you get the maximum value for your FTD Groupon, even if
you’ve already redeemed. We hope this resolution is to your satisfaction._

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elvirs
You can see 70% discounts on most boutique clothes and accessories shops and
everybody knew that its not real but consumers still love even the illusion of
discount and jump on them. Same with groupon, consumers are looking for
illusions to spend money on, after all its not the product they bought that
pleasures them but the feeling they get when they buy that product.

~~~
psykotic
> You can see 70% discounts on most boutique clothes and accessories shops and
> everybody knew that its not real but consumers still love even the illusion
> of discount and jump on them.

It's straight-up illegal in every country where consumer protection laws have
teeth.

If some people who live in countries with little or no consumer protection
have been defrauded by businesses for so long that they have come to expect it
as a matter of course, that's an argument that the practice is more than ripe
for banning, not that it should be allowed to continue unhindered.

~~~
harryh
Since when is it the job of the state to protect consumers from misleading
advertisements in boutique clothing stores? This sort of thinking is what
leads to the nanny state.

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us
The title of this thread should really be changed. First, I get that
LivingSocial is of the same type of business and hence was mentioned in the
title but then its more than just Groupon and LivingSocial.

Second, it's not Groupon that is engaging in the questionable practices. When
you're going through massive deals like this, it can be easy to miss that the
retailer you're doing business with is pulling a sly one on you. It's not
uncommon to get a separate link and to think that some on here would believe
that Groupon should thoroughly go through every link and verify for price
discrepancy that may show up is unrealistic.

Lastly, it's also not uncommon for coupons to be honored on original prices
rather than sale prices.

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simonw
I think you might have missed the purpose of the link - it wasn't about the
TechCrunch story, it was about the commenter who claimed that a GroupOn sales
rep had advised him to rise his regular prices before submitting a GroupOn
deal that would offer money off, to maintain his profit margins.

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smallegan
Retail stores do this all of the time, I don't see why this is any different.
Is it not the responsibility of the consumer to spend his or her money wisely?
More and more it seems like the consumers are following the mantra of it's not
what you SPEND it is what you SAVE...and with the advent of social buying it
is giving lazy deal seekers a great way to "SAVE" every day :-P

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yatacc
word on the street is that Gap-Groupon deal worked out horribly bad for Gap.
They were hoping people to spend more than the 50$. And it seems that a
very,very small number actually did that. Majority limited their purchases to
very close to the coupon amount. I doubt if Gap will be doing a Groupon again.

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wildmXranat
Hold on, you mean there's a markup on those discounts?

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WillyF
Having had a Groupon shouldn't preclude a business from offering other
promotions. Typically you can't combine a Groupon with another offer, so if a
restaurant has 20% off Mondays and you use a Groupon, they'll probably charge
you full price and then subtract the Groupon. If people are truly unhappy with
the FTD deal, then I'm sure Groupon will live up to The Groupon Promise and
happily refund them.

The comment that this links to is much more disturbing, but it happens
whenever you have a huge sales team. The real question is whether deals based
on inflated prices are actually being sold. That would be alarming.

~~~
acgourley
Look no further than the "2 dozen mini cupcakes for $25, normally $50, half
off!!!"

It's happening all the time, perhaps from Groupon's suggestion, perhaps from
the merchants' own machinations.

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pchristensen
Not sure what the cupcake deal you're referring to is, but the cupcake place
by my house sells a single cupcake for $3.50, so $50 for 2 dozen minis doesn't
sound _completely_ off.

~~~
acgourley
Mini's are usually half the cost of a fullsized, and buying 24 at a time
should give you somewhat of a discount off buying a single.

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aikinai
LivingSocial isn't mentioned in this article at all. Why are they included in
the title of the submission?

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vyrotek
They were mentioned in the comments

~~~
aikinai
Oh I see. Thanks for the clarification.

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MatthewDP
Not to mention you can always get 20% off FTD if you do a google search for a
coupon.

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smokey_the_bear
It depends on the business type, but I'd suspect most business owners are
savvy enough to know it won't help them acquire customers. I got a groupon to
eat at a restaurant in Berekley, $10 for $25, and either the prices were
specifically marked up to combat the groupon, or the owners are suffering some
delusions of grandeur. Either way, the food was good, but it wasn't worth
40/person, and I won't go back.

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jasonmcalacanis
Such a lame link-baiting story. These kind of things happen all the time...
it's channel conflicts and speed errors typically--not malice.

Look at the headline, look at the author.... it's manufactured link bait.

let's move on and talk about an important startup launching something cool.
techcrunch is lost and adrift.

~~~
benjaminlotan
actually i didnt post this to HN... i just commented on techcrunch and i had
no idea that this response would happen. If you read my comment it's pretty
relevant. Just saying.

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wccrawford
It's not unusual to disallow coupons on the sale price of items. I admit
that's questionable, but...

GroupOn didn't do this. FTD did. As far as GroupOn knew, everything was good,
so far as I can tell. Throwing mud on their name without any proof at all is
wrong.

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maukdaddy
If you don't think Groupon knew about this, I have an awesome bridge to sell
you.

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nhangen
It's also their job to know, so if they don't, it's almost worse.

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malloreon
Reminds me of the scandals that plagued yelp when it was local startup of the
summer

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endlessvoid94
How is this questionable? The business owner is always free to refuse. Always.

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endlessvoid94
Downvoted with no responses?

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mcantor
I think you're getting downvoted because "they're doing something skeezy" and
"prospective partners are free to refuse" are orthogonal. If I walk up to a
random person on the street and ask them what their credit card number is,
that's questionable & skeezy, even though they can just tell me to buzz off!

~~~
endlessvoid94
I see. You're right.

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keltex
Another thing I've see (by a 3rd site... Homerun.com) is being added to their
list when I've never even visited the site. Somebody in my contact list added
me to their list and now I get their spam.

