| Thursday October 23rd 2014

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Why Groupon is poised for collapse


wall collapse

The author has great points. Why the company is not transparent is obvious – the refunds they issue hurt the growth. I personally have about $500 in “Groupon Dollars” in my account. Deals I couldn’t or didn’t use, that because I’m in the State of California they cannot expire. So they don’t refund my credit card, but issue me funds to use on other deals.

I believe this company has a business model designed for disaster. Need to use my Groupon Dollars soon! (BTW, Author is also right on the inability to track refunds – a couple of times they refunded my account twice for the same purchase)

So what’s happening at the coupon company?

Well, for starters, it’s not a coupon company nor a marketing company. At its core, Groupon’s U.S. business is a receivables factoring business, as I wrote last year. They give loans to small businesses at a very steep rate (the price of the discount plus Groupon’s commission). They get the money to fund these loans from credit card companies such as Chase Paymentech. Groupon is essentially a sub-prime lender that does zero risk assessment. And as word continues to spread about what a terrible deal running a Groupon is for many categories of businesses, the ones that will choose to run Groupons are the ones that are the most desperate. For U.S. based businesses, the only time I can definitely recommend running a Groupon is if it is otherwise going to go out of business.


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