July 21, 2010

The deal:
$40 for 10 Classes at Bikram Yoga Pasadena ($125 Value)

The Fine Print: (The below was in 12px font.  CA law is 10-point font which is 13.3px font.)
Expires Dec 31, 2010
Must activate by exp. date,
valid for 2 mos. after redemption.
Limit 1/person.
Not valid for 8am Sat. & Sun. classes.
No extensions, cash, or credit back.
Non-transferable.
Not valid w/new client special, other offers.
Rsvn. req’d at least 24 hrs. ahe

=========================================

Dec 17, 2010 Ticket Msg. to Groupon customer Service

Hello, I will not be using the groupon pepreaid offer that I bought #5******-*-*. Would it ..[be possible to get this refunded as soon as possible?  Thanks]

Tom *******

________________________________________

From: Tim <notifications-mail@groupon.com>
To: Tom *******
Sent: Sat Dec 18 12:21:36 2010
Subject: Re: Hello, I will not be using the groupon pepreaid offer that I bought #5211817-0-1. Would it … (ticket #1415478)
## Reply above this line ## ________________________________________
Tim, Dec-18 02:21 pm (CST):

Hi Tom,

Once the deal is closed we only issue refunds if there is a problem with the service or other extenuating circumstance. You can still give this away as a gift if you decide it is something that you no longer would like to use.

Please let me know if you have any other questions or if there is anything else I can do to help.

Regards,

Tim
support@groupon.com

________________________________________

From: Tom *******
Sent: Saturday, December 18, 2010 12:28 PM
To: ‘mail@groupon.com’
Subject: Re: Hello, I will not be using the groupon pepreaid offer that I bought #5211817-0-1. Would it … (ticket #1415478)

The gift idea is nice but I just want my money back. I know that in California I have several years to use the certificate but I don’t want to have ask the merchant to do that. Can you just refund the money?

Happy holidays.

________________________________________

From: Tim <notifications-mail@groupon.com>
To: Tom *******
Sent: Sat Dec 18
Subject: Re: Hello, I will not be using the groupon pepreaid offer that I bought #5211817-0-1. Would it … (ticket #1415478)
## Reply above this line ## ________________________________________
Tim, Dec-18 03:10 pm (CST):

Hi Tom,

Again, once the deal is closed we only issue refunds if there is a problem with the service or other extenuating circumstance. Please let me know if you have any other questions or if there is anything else I can do to help.

Regards,

Tim
support@groupon.com

________________________________________

Ticket Msg to Tim @ Groupon customer Service

Missing message – I believe I referenced the groupon promise post on refunds if you are not satisfied..”The Groupon Promise: if Groupon ever lets you down, we’ll return your purchase—simple as that.”

________________________________________

From: Tim [mailto:notifications-mail@groupon.com]
Sent: Tuesday, December 21, 2010 2:09 PM
To: Tom *******
Subject: Re: Hello, i never heard back on this issue (see below). I note Andrew has a practical approa… (ticket #1443939)
# Reply above this line ##
Tim, Dec-21 04:09 pm (CST):

Hi Tom,

Thanks again for your email, our Groupon Promise – which you cited – exists to protect people that purchase a Groupon, use or try to use it, and then have a poor experience. We don’t want people to be afraid to use Groupons, so we implemented the Groupon Promise to protect them if something goes awry. It doesn’t happen frequently, but we’re there in case it does!

However, the Promise does not cover cases where a Groupon is not used with no fault to the business. We understand that sometimes extreme circumstances arise due to emergencies, and we can often times work something out in those situations. But if you purchase a Groupon and then later decide that you do not want to use it because you changed your mind, we ask that you give it to someone you think may enjoy it.

A Groupon can easily become a gift — you simply give it to your friend and they can use it, even if your name is on it. The second to last paragraph of the blog post for the Groupon Promise briefly discusses this topic.

I hope this helps to further clarify things and if you have any further questions, let me know!

Regards,

Tim
Groupon Customer Support

________________________________________
From: Tom *******
Sent: Tuesday, December 21, 2010 2:34 PM
To: Groupon
Subject: RE: Hello, i never heard back on this issue (see below). I note Andrew has a practical approa… (ticket #1443939)

Hi Tim,

Thanks for the reply.  As I mentioned before the idea of gifting it is a good one.  However, how would you feel if I gave you a Groupon that has 9 days to use it?  (At least that is what the Yoga Studio says.)  That isn’t very cool to give that away.  Also, maybe your have friends have thicker skin than mine as I think [they] would be offended.   They would be thinking “Tom is such a jerk he gave me this exercise gift certificate.”  I think they would imagine that I believed they needed to loosen up or loose some weight by giving them exercise class gift certificate.  Also, have you ever been to a Bikram Yoga?    It is really sweating and they even were shut down but the health department http://www.drishtikone.com/content/bikram-yoga-studio-closed-la-due-violations

See the problem is that in California gift certificates don’t expire.  Yet the Yoga studio says I have to use it before December 31st, 2010.    I can understand their interest in having these used by then but that just isn’t the law in California.    I think you should consult your legal counsel to get a read on the California consumer protections.  It probably would be easier to refund me my money.

Thanks
Tom

________________________________________
From: Tim [mailto:notifications-mail@groupon.com]
Sent: Tuesday, December 21, 2010 2:54 PM
To: Tom ********
Subject: Re: Hello, i never heard back on this issue (see below). I note Andrew has a practical approa… (ticket #1443939)
## Reply above this line ##
Tim, Dec-21 04:53 pm (CST):

Hi Tom,

After reading No Extensions, but also Non Transferable in the original Fine Print, I just issued you a full refund and removed this Groupon from your account. Please allow up to 10 business days for this to be reflected on your statement.

And it’s not jerky to give someone an exercise Groupon! It means you care! Just wouldn’t give one to a wife or girlfriend. Might get you slapped.

Have a great week!

Regards,

Tim
support@groupon.com

Great work on all of your Group/daily deals coverage. I bought a deal on LivingSocial, but the merchant is so small and overwhelmed that I can’t redeem my deal for two months, which defeats the purpose of this particular deal. Just wanted to encourage you to explore the overselling of such small merchants. Read on for details…
I bought my first deal on Living Social on Monday: house cleaners for $55. I’m looking for good housekeepers to come to my new home every two weeks. The merchant’s website (http://www.homeprocleaningservice.com/about-us.html) states that they’re a four-person cleaning crew. 12 hours before the offer ended, LivingSocial had sold 446 deals (not sure how high it went). Supposing each home takes one employee two hours to clean, that’s 446 * 2 = 892 hours. If each employee works 40 hours/week, that’s 22.3 employee-weeks or 5.58 company-weeks on top of whatever business they were doing already. Sure enough, they’re now telling me that it will be August before they’re available to come to my house. I’ve asked LivingSocial for a refund, but have not heard a response. In my opinion, they drastically oversold this merchant. There’s just no way four people can service that many homes in a reasonable period (nor can a cleaning business quickly scale up with high quality results).
Anyway, thanks for your work!
— John Lee
I’ve been reading your series on Tech Crunch about Daily Deals websites and agree with a lot of what you said. However, there are some companies that actually use these “deals” to their advantage to get more money out of people.
Let me share my story. I purchased a 50% off voucher from Travelzoo for a hot air balloon ride for my wife and I. I bought the vouchers back in November and planned on booking the trip for June.
When I called the hot air balloon company, I kept getting an automated system – I never was able to talk to a living person. And when I left a message, they never called back. Their automated system said to press “one” if I was calling to use a Travelzoo, Groupon, LivingSocial or other daily deal voucher. I pressed one and the message directed me to the company website to book my flights.
I went to their website, clicked on the reservations tab and there they had a calendar where they had a drop down menu where I could select a “travel voucher” redemption reservation, or a paid CC reservation. When I selected the voucher redemption, they had NO flights available until the end of the year, well after when my voucher expired. There were a handful of “paid CC reservations” available, but since I already bought the vouchers, I shouldn’t have to pay with a credit card. They didn’t have a separate reservation method/option that separated Groupon from LivingSocial from TravelZoo, etc. They were all lumped together.
After multiple attempts at trying to book a reservation, or getting in touch with the company directly, I called Travelzoo to get a refund. No questions asked, they refunded my money.
Here’s the shady part of the deal: The state of California has a law that requires companies to honor the value of what was paid for the voucher after it expires. In this instance, I would still be able to apply the $178 toward a flight, but would have to pay the difference, another $178. Sneaky. So by deliberately “gaming” the system, and selling more “daily deals” than they could actually accommodate, the company is actually making a lot of money. Of course, they’re also no doubt upsetting people in the process.
I thought you might be interested in seeing a deal where the provider is actually making money.
Jarrod

Great article. I like your POV, voice and supporting materials.

I think these guys duped Groupon. For a few weeks following the run of the deal they were not serving food for various reasons “kitchen
remodeling”, “slow season we’ll open the kitchen in a couple weeks”, “we are only doing a business lunch until next week”…blah blah blah.

http://www.eccomiami.com/

Before going back for the fourth time I called, no answer. Stopped by a few days later and they were closed.

After reading “Why Groupon Is Poised For Collapse” I now understand why they kept prolonging the closing. They were waiting for their next payout from Groupon.

Regards,
Jason Ibarra

I just want to congratulate you on your recent articles regarding the daily deal market!  I have been thinking the same thing for the past year or so now, but haven’t had the platform to voice my issues, as you do.   My family actually owns a wine bar in Chicago and their experience was much like the experiences you discuss in your articles.

It is very disheartening to me to see SMBs get caught up in the daily deal phenomena and get royally screwed by this.  Especially since many people invest their life savings in their businesses and get wiped out by one deal.  It’s great that you are addressing the full risks that Groupon is NOT disclosing to them.  I also believe the daily deal is promoting a negative trend to the consumer.  Pretty soon, people are going to assume they should never have to pay full price for anything.  I believe this will create a vicious circle of daily deals and discounts that SMBs will be required to offer to get new & existing customers in the door.  I also see this happening with the Location Based Marketing Services, as well.  It’s requiring SMBs to give away discounts / specials just to get people in the door.

My only hope is that the economy can recover soon enough that SMBs won’t need to give away these types of deals to appease existing customers and to acquire new customers.  The quicker this happens, the quicker the daily deal will die for good!

Regards and Thanks again,

Sean Barkulis

A business that I bought a groupon for (and have since requested and received a refund on ) is Clearwater Lodge in Fall River Mills, CA (Near Shasta)–they are currently for sale here:
http://www.livewaterproperties.com/clearwater-lodge-ca.asp
The owner of Clearwater lodge ran this deal in several cities (you can find past deals on Google easily). I spent over 2 months trying to coordinate with the owner on a simple task: the date of the fishing class I would take.  No wonder he doesn’t care, his lodge is for sale and has been on sale since last fall (did Groupon do their risk assessment on this one?)  When I complained, he even offered to help me cancel the groupon I had purchased, and now i know why (he already received the cash payment from groupon so he doesn’t care if I get a refund or not from Groupon).

I know of a second-run discount movie theater here in Tallahassee that used Groupon to boost their sales shortly before passing ownership of the business to a new company. Tallahassee Movies 8, located at 2810 Sharer Road, Tallahassee, FL 32312, (850) 671-8080, offered a discounted deal several months ago that included one movie ticket, a small box of popcorn, and a small drink for $8.00. Customers were allowed to purchase up to 3 of these Groupons. Since the movie theater already had the cheapest tickets in town, it seemed odd that they would offer even further discounts via the Groupon deal. My husband and I go to that movie theater occasionally, so I purchased two packages for us to use. We had a busy spring and weren’t able to get to the movies for a while, but, when we decided to take advantage of the offer a couple of months later, we were informed that the theater was under new management, and they were no longer honoring the Groupon deal. The ticket salesperson said the previous owners of the theater had known it was going to be taken over by a new company and were angry about it, so they had offered a bunch of discounts to customers towards the end, including the Groupon offer. We were instructed to contact Groupon to get our money refunded.

As for other points you made in the article, they reinforced many of the questions I have had about the Groupon business model. I tend to only buy Groupons for businesses I already frequent (or would be likely to frequent), so they really aren’t making much money off of me. I have taken note of a couple of the new businesses in town with which I was not familiar when I saw their Groupon (or Living Social) ads, and even visited one of these businesses since, but I did not buy deals for most of them. I guess a Groupon offer does generate some “free” advertising in the form of increased name recognition or awareness among Groupon users who do not purchase a deal, but I doubt that makes up for the lost revenue cost of doing business with Groupon. The few businesses for which I have purchased a Groupon where I was not already a customer are unlikely to see me as a serious repeat customer, either, since these purchases were generally occasional “splurges” to treat myself or my family to a special service or activity we might not have tried otherwise and are unlikely to take advantage of again soon.

Thank you for your informative and well-written article to alert businesses, customers, and potential stock investors of the risks built into the Groupon business plan.

Regards,
Sandra Wilton