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Look out bellow, Groupon...

By Done!   Follow   Thu, 2 Jun 2011, 12:27pm   4,936 views   43 comments
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Reporting a 400 million lost on 700 million in revenue in 2010.
Somebody get me a plunger, someone flushing Groupons again.

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1. thunderlips11 Follow Befriend (13) 51 threads 2,636 comments Premium

   4   3:58pm Thu 2 Jun 2011   Share   Quote   Permalink   Like   Dislike   Protected   oddhack says If Groupon has offers on Dr. Who conventions I might actually sign up. Recently took a side trip to London on the way back from business meetings in Germany and priority one was the Doctor Who Experience (though I wouldn’t have gone to London just for that). Segways are cool but not that cool. Yeah, or Sonic Screwdrivers. The most useful pocket tool ever invented in all space and time...

2. corntrollio Follow Befriend (5) 27 threads 2,073 comments

   5   4:21pm Thu 2 Jun 2011   Share   Quote   Permalink   Like   Dislike   thunderlips11 says But if you are a restaurant, people will come for the $40 meal but not return to pay $80 for the exact same meal without the coupon. They may not be able to justify the expense without the coupon. “We can’t spend $80 on dinner out every week!” or “It was good, but not $80 good.” The initial reports I've read say that many businesses feel that they aren't getting that much value out of these Groupons. They get a quick burst of business, but no lasting effect, and sometimes the Groupon is more expensive than any additional business they do receive. Groupon is trying to take advantage of the current environment by rushing the IPO. Their main draw is that they have the jump on their competitors and they currently have a high margin, but they don't make any money, and their fixed costs (local sales people) are high. Give it some time, let the businesses realize that Groupon isn't helping them all that much in the long-run, and you'll see those margins drop. How do you look at their revenue trajectory and not say "bubble"? Also, while their revenue figures sound impressive because they count the full value of the Groupon, it's important to look at their actual profit, since a large percentage of their revenue actually goes to the advertisers.

3. tdeloco Follow Befriend (2) 11 threads 218 comments San Jose, CA

   6   2:00am Fri 3 Jun 2011   Share   Quote   Permalink   Like   Dislike   thunderlips11 says Not a lot of repeat business comes out of Groupon. What business can keep offering 50% off and stay in business? When people get an $80 meal for $40, they still remember that the two entrees and two glasses of wine plus dessert would normally cost $80. What business can keep offering 50% off and stay in business? Oh geez... what about supermarkets? I constantly see discounts up to 50% off, and I, or anyone I know, ever buys anything that isn't on sale... so how does that work? If you know retail at all, there is a multi-fold markup for all products. If you want to be profitable, your full retail price on any item is at least 4x the price you got it for (maybe more). You are still very profitable even offering sales of up to 25%. Offering 50% off is about the break-even point. Your business has bills to pay. So 50% off is a good promotional price point to promote your business. It can bring people in, and you can hope they buy something else. Businesses occasionally offer 50% off with or without Groupon. They have been doing so for as long as I can remember. A business might as well hawk the deal to a large email list rather than a paper full of other ads. Even for restaurants. If you don't normally spend $80 on food, and the deal is for $40, you'll at least end up having eaten at that restaurant. They can only do so much to impress you, but what's important is to get their business known. http://www.inc.com/magazine/20100401/how-to-use-groupon-to-boost-sales.html Certain type of businesses really benefit from Groupon, such as clases. In the link above, business owner Lani Henderson offered a package of dance classes for $35. Many of the customers have since signed up for more classes. Another restaurant offered two sandwiches for the price of one. The business owner only broke-even for that deal, but his business was up 20% since the promotion. corntrollio says The initial reports I’ve read say that many businesses feel that they aren’t getting that much value out of these Groupons. Groupon simply can't work for all business, probably not even for most business. But it is far from bubble or a business that cannot last.

4. thunderlips11 Follow Befriend (13) 51 threads 2,636 comments Premium

   7   11:58am Fri 3 Jun 2011   Share   Quote   Permalink   Like   Dislike   Protected   tdeloco says What business can keep offering 50% off and stay in business? Oh geez… what about supermarkets? I constantly see discounts up to 50% off, and I, or anyone I know, ever buys anything that isn’t on sale… so how does that work? BIZ MODEL Those are "Loss Leaders", and is a tried and tested strategy. If a grocery store offers half-off all General Mills cereal, then chances are mommy will buy full cost milk, eggs, cheese, and bread while she's there. Generally, in restaurants you're only buying one meal at a time, not multiple entrees. In a restaurant, if I'm offering 50% off entire meals for a group of people, I'm making very little or even taking a loss in hopes of future business. So yes, depends on the business. As I mentioned above, GPRNs participating businesses are overwhelmingly luxury service providers like Mud Baths, Manicures, Pilates Classes, etc. - all of which are optional and require disposable income. Going into a double dip recession, is this a good stock to buy? I'm starting to call this company, "Spa-pon". You can cut out the mani-pedis but you still gotta go to the A&P to buy milk or bread. When SHTF, the first things families cut are "luxury" services like the ones above. FINANCIALS GRPN raised more than a billion in capital, including about $900M last January, but then paid back about 90% of it to early investors, leaving the comapny with just over $100M! Check this out: http://allthingsd.com/20110602/where-did-groupons-billion-dollars-go/ GRPN churns through more than $100M in expenses, and spends a fortune on advertising and employees. Their business model is very easily duplicated. The vast majority of their staff is sales people. Less than 5% of their workforce are on the tech side. If they grow, will they have to spend even more than they already do on salespeople? There are also disclosures in the IPO documents of what seems to be serious legal problems that might wind up with the FTC stepping in as well regarding how the Groupons work for both consumers and participating businesses. IMHO, Groupon is definitely Bubble-licious.

5. thunderlips11 Follow Befriend (13) 51 threads 2,636 comments Premium

   8   2:02pm Fri 3 Jun 2011   Share   Quote   Permalink   Like   Dislike   Protected   Business Model easily imitated. Note also, the target market is not exactly in Sausage Factory territory.

6. corntrollio Follow Befriend (5) 27 threads 2,073 comments

   9   2:12pm Fri 3 Jun 2011   Share   Quote   Permalink   Like   Dislike   tdeloco says But it is far from bubble or a business that cannot last. Rationalize it however you want, but a look at its finances shows differently -- the headline says "Groupon is Effectively Insolvent": http://finance.yahoo.com/news/Groupon-is-Effectively-minyanville-3764150861.html tdeloco says What business can keep offering 50% off and stay in business? Oh geez… what about supermarkets? I constantly see discounts up to 50% off, and I, or anyone I know, ever buys anything that isn’t on sale… so how does that work? If you know retail at all, there is a multi-fold markup for all products. If you want to be profitable, your full retail price on any item is at least 4x the price you got it for (maybe more). You are still very profitable even offering sales of up to 25%. Offering 50% off is about the break-even point. Your business has bills to pay. So 50% off is a good promotional price point to promote your business. It can bring people in, and you can hope they buy something else. If you think it's actually that simple in the supermarket business, you don't understand the supermarket business. Margins are thinner than you think, the market is very competitive, and some of the money lost during sales comes from wholesalers giving kickbacks from their promotional budget. There are incredibly complex algorithms used for placement and sales, more complex than a typical retail establishment, because this segment is so competitive. Furthermore, if you think restaurants are marking things up 4:1, you don't understand the restaurant business. The markup is typically not nearly that high. Some people even say that many restaurants only make about 5% after expenses. 50% off can kill your return, which is why Groupon's margins will continue to drop as businesses catch on that they aren't getting much return. Groupon's local salesforce is very expensive to maintain, so it's not like other tech companies. They increased revenues quickly because there was little competition at the time, and they grew very fast, but they still lose massive amounts of money.

7. marko Follow Befriend 7 threads 157 comments

   10   5:12pm Fri 3 Jun 2011   Share   Quote   Permalink   Like   Dislike   Groupon is a pretty stupid name. I cant see any reasonable person saying that word more than a few times. Let us watch the rise and explosion.

8. pkennedy Follow Befriend (8) 28 threads 1,341 comments Redwood City, CA

   11   6:17pm Sat 4 Jun 2011   Share   Quote   Permalink   Like   Dislike   Many businesses are complaining that the business is not coming back, that they are 1-off deals. However, there will likely be customers that want to get rid of some inventory and/or sell something cheaply on off days. One restaurant I like to frequent had a $25 for $50 deal. The buffet was $50. That didn't include drinks. It was limited to 1 person as well. In the end, for most couples, they would end up getting a minimum of about $75 assuming 2 people showed up and had 1 drink, even just cokes really. I never found anything too useful on their site, but there are a lot of customers who will buy into this, and sure many will be burned, but many more will keep doing it. There are enough businesses out there, that groupon isn't going to run out of candidates for quite awhile. They'll also be able to target businesses with possibly excess inventory. They are making huge amounts of money!

9. MsAnnaNOLA Follow Befriend 58 comments

   12   6:29pm Sat 4 Jun 2011   Share   Quote   Permalink   Like   Dislike   Very duplicateable. New Orleans has its own version. Fetch Puppy.com Very bubbilicious. Ditto what corntrollio said. The grocery business is very complicated. There are slotting fees that companies pay to get product on shelves. This is to get on the shelves. Then if you don't sell they take you off the shelves and keep the $$$. What a racket. Yes how many times can people give 50% especially if they don't see any long term increase? I guess some will benefit but many will not, but maybe they are needing this service because their business is crappy to begin with. Ie not to be repeat customers because they will be out of business.

10. tdeloco Follow Befriend (2) 11 threads 218 comments San Jose, CA

    13   5:13am Mon 6 Jun 2011   Share   Quote   Permalink   Like   Dislike (1)   Thanks for educating me. I didn't know Groupon's finances were so screwed up. It looks like one hell of a mess. And perhaps the last nail in their coffin has already been hammered. It's still does not meet the description of a bubble. You guys are simply abusing the word. If you told people in 2000 to stop investing in tech stocks, they'd tell you you're crazy. They didn't think they could lose. That's a bubble! If you told people not to buy houses in 2007, they'd tell you you're crazy. They didn't think they could lose! That's a bubble. This was never the case for Groupon. I never heard anyone say "OMG! Invest in Groupon and you can't possibly lose". Groupon screwed up, plain and simple. Most people are already anticipating their demise. thunderlips11 says Business Model easily imitated. That is correct thunderlips11. Which is why what's important for them is to maintain their market share, which, in turn, is why most of the people they hired are sales. I can't say that it's gonna work since this Groupon thing is an entirely new experiment. We still don't know what could make a Groupon-like business successful. SF ace says 3 years ago, Facebook and Friendster were battling it out. Facebook was well financed, Frienster not so much. Easy to predict what happened. I don't agree that it's all about the financing. Myspace was the big site then. Everyone was jumping ship because Myspace had too much advertising and too many perverts. Facebook was clean and their ads were unobtrusive. Also, Facebook continued to innovate. "The wall", for example, was so simple yet ingenious. Soon enough, Myspace and Friendster simply weren't as "cool." Google vs Yahoo was a similar story, somewhat. Yahoo was already a giant when Google was nobody. Google was simple and their ads were unobtrusive. Most importantly, they had better search results. thunderlips11 says I’m making very little or even taking a loss in hopes of future business. To make very little... isn't that the definition of a break-even point? As I said earlier, businesses are willing to go to the break-even point with the hopes of promoting their business. I can't imagine alot of restaurants continuing to use Groupon (or the like). However, a rare/occasional deal from that sandwich shop in the corner could work. If it weren't for Groupon, people might not even know your sandwich shop existed. corntrollio says If you think it’s actually that simple in the supermarket business, you don’t understand the supermarket business. All I need to know is that Walmart is one of the biggest companies out there, followed by Target, etc. Yes, I recognize that their business is super competitive and complicated, but if they're barely profitable, how can they be so big and growing so rapidly? Be it slotting fees or whatever, they have to be making good money. corntrollio says Furthermore, if you think restaurants are marking things up 4:1 I never said this about restaurants. I said it about retail stores, and 4:1 is a grossly simplified example. And, yes, 50% is a big loss for some restaurants. For some it's just break-even (or maybe a little loss). But Groupon isn't all restaurants. As I've said: "Groupon simply can’t work for all businesses, probably not even for most businesses."

11. thunderlips11 Follow Befriend (13) 51 threads 2,636 comments Premium

    14   10:27am Mon 6 Jun 2011   Share   Quote   Permalink   Like   Dislike   Protected   tdeloco says It’s still does not meet the description of a bubble. You guys are simply abusing the word. True, it doesn't trade yet. But I wouldn't be surprised if the chart after IPO looks like a copy of LinkedIn. tdeloco says Which is why what’s important for them is to maintain their market share, which, in turn, is why most of the people they hired are sales. Right, TD. Question is, how expensive will that marketing be? It's difficult to truly ascertain, and their accounting practices aren't conforming to GAAP, making accurate valuation difficult, but it looks like they spend a huge chunk of change to get the market share they have now: The CEO of the company, Andrew Mason, wrote a letter to “potential shareholders” for the IPO filing and made an interesting request — that is, he said investors should ignore the marketing costs. That's a red flag. Here's more - unorthodox accounting: That’s right. He said the best metric is “adjusted consolidated segment operating income” or adjusted CSOI. It’s a mouthful — but also a red flag. Hey, don’t great dot-coms like Google, eBay (NASDAQ:EBAY) and Priceline (NASDAQ:PCLN) make real profits, which are based on generally accepted accounting (GAAP) standard? Of course they do. They do not have to resort to fancy formulas. Check out the history of the key personnel over at GRPN. But if you delve further into the structure of Groupon, you’ll notice that there are two other critically important co-founders: Eric Lefkofsky and Bradley Keywell. They are in their early 40s and have lots of background financing companies. During the early 1990s, Lefkofsky and Keywell were able to arrange a leverage buyout of Brandon Apparel Group, which focused on clothing for children. But it was a flop and had to be shuttered. What next? How about a dot-com? So in 1999, Lefkofsky and Keywell launched StarBelly.com, which was for promotional items. Within about a year, they sold the company for $240 million to HA-LO Industries. Keywell became the president and Lefkofsky took the role as a senior officer. Unfortunately, by July 2001, HA-LO filed for bankruptcy under Chapter 11. Of course, there were a slew of lawsuits from angry investors. But such things were not a problem for Lefkofsky and Keywell. They were able to go on to start InnerWorkings (NASDAQ: INWK), which provides printing services and Echo Global Logistics (NASDAQ:ECHO), which helps with the supply-chain in the transportation industry. These companies have fared much better. Yet they have not been IPO winners. In the case of InnerWorkings, the IPO was priced in August 2006 at $9 per share. The stock price is now $8.58. As for Echo Global Logistics, the company launched its IPO in October 2009 at $14. The stock is only $0.75 higher. Granted, many top entrepreneurs have had failures. It’s natural. But the fact is that the Groupon founders have had little success for public shareholders. All quotes from: http://www.investorplace.com/44296/groupon-grpn-andrew-mason-ceo-founder/

12. corntrollio Follow Befriend (5) 27 threads 2,073 comments

    15   11:20pm Tue 14 Jun 2011   Share   Quote   Permalink   Like (1)   Dislike   thunderlips11 says That’s a red flag. Here’s more - unorthodox accounting: Speaking of which, did you see this article elucidating their financial policies that screw merchants as well as their ponzi-like method of paying accounts payable? http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/ Groupon is not an Internet marketing business so much as it is the equivalent of a loan sharking business. The $21,000 that the business in this example gets for running a Groupon is essentially a very, very expensive loan. They get the cash up front, but pay for it with deep discounts over time. From Groupon’s S-1: Our merchant payment terms and revenue growth have provided us with operating cash flow to fund our working capital needs. Our merchant arrangements are generally structured such that we collect cash up front when our customers purchase Groupons and make payments to our merchants at a subsequent date. In North America, we typically pay our merchants in installments within sixty days after the Groupon is sold. We use the operating cash flow provided by our merchant payment terms and revenue growth to fund our working capital needs. If we offer our merchants more favorable or accelerated payment terms or our revenue does not continue to grow in the future, our operating cash flow and results of operations could be adversely impacted and we may have to seek alternative financing to fund our working capital needs. Translation: They’re using money from new deals to pay for previous deals. They need to keep growing revenue. As of March 31, they owed merchants $290.7 million. In the agreement I’ve seen, the first installment is 33% in 5 days. If they have to pay merchants faster, that could lead to problems. And Google might force that to happen. According to Google Offers’ payment terms, merchants receive 80% of their share in 4 days—more than twice as much, 1 day earlier. There’s no way that was an accident. You should also read Agrawal's other posts on Groupon, as well as his post on Groupon's ridiculously one-sided contracts.

13. thunderlips11 Follow Befriend (13) 51 threads 2,636 comments Premium

    16   10:29am Wed 15 Jun 2011   Share   Quote   Permalink   Like   Dislike   Protected   CT, thanks for this and your other great posts. Lots of good reading material here! EDIT: If found this story invaluable: http://techcrunch.com/2011/06/09/groupon-single-worst-decision/ Thanks again. I feel really bad for this cafe owner (Jesse of Posie's Cafe) who learned a valuable, but expensive lesson: After three months of Groupons coming through the door, I started to see the results really hurting us financially. There came a time when we literally could not make payroll because at that point in time we had lost nearly $8,000 with our Groupon campaign. We literally had to take $8,000 out of our personal savings to cover payroll and rent that month. It was sickening, especially after our sales had been rising. Sure, maybe thinking of it as just marketing may seem justified, but anyone that knows me well knows that I would never pay more than $100 for advertising, much less $8,000, because I don’t believe that regular advertising had much return on investment at all. So the experience jaded me, and the interactions with the few bad Groupon customers we had jaded our staff. After all of this, I find myself not even willing to buy Groupons because I know how it could hurt a business (side note: service industry businesses do quite well with features like this because it is just the cost of time – you are not paying for a product for resale. Resale, in my opinion, get hit the hardest). http://posiescafe.com/wp/?p=316 Wow. And many of the Grouponers all went back to their computers and White-Whinged* about her cafe too, offsetting all the positive comments and ratings on Yelp, etc. from her Regulars. * White Whines: http://whitewhine.com/

14. corntrollio Follow Befriend (5) 27 threads 2,073 comments

    17   12:53pm Wed 15 Jun 2011   Share   Quote   Permalink   Like   Dislike   thunderlips11 says I feel really bad for this cafe owner (Jesse of Posie’s Cafe) who learned a valuable, but expensive lesson: Yes, it's sad because, as Agrawal says, many of these restaurant owners wouldn't do a traditional ad campaign due to the expenditure. Yet, they are getting suckered into doing these overpriced ad campaigns that aren't under their control in terms of timing or substance, that have no cost controls, and that largely benefit Groupon and not the business.

15. EBGuy Follow Befriend 4 threads 2,095 comments

    18   2:39pm Wed 15 Jun 2011   Share   Quote   Permalink   Like   Dislike   You have to love the 'walk away' meme in the last installment. http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/ Where have I heard that before?

16. swebb Follow Befriend (3) 29 threads 490 comments Denver, CO

    19   2:52pm Wed 15 Jun 2011   Share   Quote   Permalink   Like   Dislike   tdeloco says All I need to know is that Walmart is one of the biggest companies out there, followed by Target, etc. Yes, I recognize that their business is super competitive and complicated, but if they’re barely profitable, how can they be so big and growing so rapidly? Be it slotting fees or whatever, they have to be making good money. It has a lot more to do with how fast (and efficiently) they turn their inventory than how much their gross margins are. This article: http://www.investopedia.com/articles/stocks/05/04405.asp#axzz1PNqfiUu7 says that Wal Mart does 8 inventory turns per year...I'm surprised as I thought it would actually do a lot better than that. Still, it's a lot better than a lot of mom-n-pop shops that probably struggle to do 2-3 turns per year.

17. corntrollio Follow Befriend (5) 27 threads 2,073 comments

    20   3:02pm Wed 15 Jun 2011   Share   Quote   Permalink   Like   Dislike   tdeloco says All I need to know is that Walmart is one of the biggest companies out there, followed by Target, etc. Yes, I recognize that their business is super competitive and complicated, but if they’re barely profitable, how can they be so big and growing so rapidly? Is Walmart growing rapidly? I haven't looked at their financials, but I don't think of them as a growth stock, except perhaps with respect to their growing international business: From: http://seekingalpha.com/article/254401-can-wal-mart-be-a-growth-stock-again-let-s-start-with-a-dividend-hike Walmart’s other option is to accept the fact that the company is no longer a growth stock and increase its dividend payout to reward its shareholders. Long time shareholders have seen no capital appreciation and very low dividend payouts for years. Wal-Mart pays out 29% of earnings via dividend distributions. The payout wouldn’t be that bad if the company had growth. The dividend payout is comparable to Target and Costco but the stock’s growth is not. Over the past 10 years, Costco’s stock is up nearly 80% and Target’s shares have risen 50%. Wal-Mart is up 2.5%. Wal-Mart has essentially been a low yielding bond for more than a decade. However, speaking of Walmart's growth, have you seen this animation of Walmart's expansion? It's pretty cool: http://projects.flowingdata.com/walmart/

18. thunderlips11 Follow Befriend (13) 51 threads 2,636 comments Premium

    21   9:40am Wed 10 Aug 2011   Share   Quote   Permalink   Like   Dislike   Protected   After Groupon dumps "exotic" accounting measure, reports loss of almost $200M for the last year. Groupon Inc., the biggest provider of online coupons, reported a second-quarter loss after backing away from an accounting method critcized by U.S. regulators. Groupon excluded controversial figures for adjusted consolidated segment operating income, or adjusted CSOI, in an amended initial public offering filing today. The company’s operating income accounting was being studied by the Securities and Exchange Commission as part of a routine review of its IPO registration, a person familiar with the matter said on July 27. The company, which filed for a $750 million IPO on June 2, reported a second-quarter loss of $102.7 million in the period ended June 30, compared with a loss of $35.9 million a year earlier. Second-quarter sales increased 10-fold to $878 million. Based on new accounting using CSOI, Groupon said today it had a loss of $181 million last year, compared with adjusted CSOI of $60.6 million in a filing last month. Groupon’s unusual approach to accounting may have caused “digestive problems” with the SEC, possibly delaying the initial public offering by one month, Richard Sauer, a former official at the government agency, said last month. http://www.bloomberg.com/news/2011-07-29/groupon-s-digestive-problems-at-sec-may-delay-ipo-former-official-says.html Another .com Turkey.

19. Vicente Follow Befriend (8) 203 threads 4,407 comments Davis, CA

    22   10:18am Wed 10 Aug 2011   Share   Quote   Permalink   Like   Dislike (1)   What? The Web 2.0 boom is more WebVan style hotair? Say it ain't so!

20. thunderlips11 Follow Befriend (13) 51 threads 2,636 comments Premium

    23   9:48am Thu 1 Sep 2011   Share   Quote   Permalink   Like   Dislike   Protected   PeHub's Connie Loizos wrote a negative story about Groupon yesterday. Five minutes later, a third-party spokesman for Groupon, Michael Buckley of PR firm the Brunswick Group, emailed Loizos complaining about the story and asking her to call him. Loizos called Buckley. Then, this morning, Loizos published a detailed story recounting their entire phone conversation. It's a doozy. Despite the fact that Groupon is in a "quiet period" ahead of its IPO, Buckley advised Loizos to please check out a "leaked" memo Groupon CEO Andrew Mason wrote to employees defending the company against critics in the press. (According to one source, Groupon's last VP of communications quit the company because Mason wanted to do things like "leaking" that memo.) Buckley also told Loizos to "please call him the next time I plan to write a “nastigram” about Groupon." http://www.businessinsider.com/wow-this-reporter-just-dropped-the-hammer-on-groupons-pr-rep-2011-9

21. corntrollio Follow Befriend (5) 27 threads 2,073 comments

    24   12:52pm Thu 1 Sep 2011   Share   Quote   Permalink   Like   Dislike   Sounds like there may be some SEC enforcement action coming soon. What's next? Mason tweeting: "Srsly guyz, we R not a Ponzi skeme."

22. Done! Follow Befriend (4) 159 threads 2,826 comments

    25   9:48am Sat 24 Sep 2011   Share   Quote   Permalink   Like (1)   Dislike   Reported on September 23, 2011: 6:30 PM ET For the first half of 2011, Groupon is now reporting revenue of $688 million -- a big drop from the $1.5 billion it claimed previously. For 2010, its last full year of operations, Groupon is now reporting sales of $313 million -- down from its previous $713 million. Well isn't that what I said? Tenouncetrout ridiculed GC on Thu, 2 Jun 2011, 12:27pm Reporting a 400 million lost on 700 million in revenue in 2010. Somebody get me a plunger, someone flushing Groupons again. So let me get this straight, since June Wall and the Regulators have let Groupon continue with accounting practices, that gave them like 60% more in erroneous sales figures? But not only that, but when they were making up the first half figures they were revising the figures for the last quater of '10 that included the merchant's portion of the sales. You would think that back in June, they would have been told THEN, they better not use the same practices that over estimated their worth in 2010. Seems like there's a lot more to this story, than just a good ole fashioned "Whoopsie! My Bad...".

23. APOCALYPSEFUCK is Shostakovich Follow Befriend (28) 171 threads 4,197 comments Premium

    26   10:24am Sat 24 Sep 2011   Share   Quote   Permalink   Like   Dislike   Protected   Groupon is an index of ptomaine-riddled dying restaurants that are so devoid of custom that they have to desperately cultivate traffic through half-off scams like Groupon and setting out waitresses in front of the restaurant to do jumping jacks in wet T-shirts. If you see a Groupon deal being touted by a restaurant, you know they are probably dangerous and going out of business very soon.

24. thunderlips11 Follow Befriend (13) 51 threads 2,636 comments Premium

    27   4:02pm Fri 4 Nov 2011   Share   Quote   Permalink   Like (1)   Dislike   Protected   The most avid Groupon Groupees strike me as the kind of folks who are bargain-braggers, and aren't really interested in coming back (without getting the same discount, that is). Also, those same bargain-nuts will be the first to run to Yelp and write a whole bunch of negative shit if you get slammed or run out of product.

25. corntrollio Follow Befriend (5) 27 threads 2,073 comments

    28   4:18pm Fri 4 Nov 2011   Share   Quote   Permalink   Like   Dislike   thunderlips11 says Also, those same bargain-nuts will be the first to run to Yelp and write a whole bunch of negative shit if you get slammed or run out of product. Very true, this is one of the criticisms written in some of the links I've read -- thunderlips mentions the article about Jesse of Posie's cafe which is an account of the poor experience of a merchant who tried out Groupon. Groupon's campaign was so damn expensive to begin with, but on top of that, it caused other problems because it brought in so many low quality customers who will never come back because they are GrouponWhores, and because the regular customers would have paid regular price anyway (and were annoyed by waiting in long lines for the idiot Grouponers). She specifically pointed out that Groupon forced her to increase the size of her Groupon to $10 or $15 minimum even though she owned a coffee shop and most purchases were well under $10. Many asshole Grouponers threatened to badmouth her on Yelp if she didn't let them make $6 purchases now and save the $4 for later, but that's not what's supposed to happen under the offer. It functions as a very very expensive advertising program and/or as a very above market loan of cash to Groupon (as mentioned in one of the articles on TechCrunch I sent above): Imagine you’re a small business owner. You have to choose between two propositions: You can pay $62,500 for marketing. You’ll get a whole lot of customers coming through your door. No guarantees if they will ever come back, but they’ll come once. I’ll pay you $21,000. You get $7,000 in about 5 days, another $7,000 in 30 days and the remainder in 60 days. In exchange, you’ll give my customers cheap products for the next year. I’ve been working on local for a long time and I know it’s hard to get small businesses to spend money on advertising. Really hard. Even getting $200 a month ($2,400 a year) is a high hurdle to meet. There’s no way a business will sign up for #1. Most merchants would laugh you out of the store if you asked for $60,000. Except they are. In droves. Although they sound completely different, #1 and #2 are really the same—it’s the Groupon business model.

26. APOCALYPSEFUCK is Shostakovich Follow Befriend (28) 171 threads 4,197 comments Premium

    29   5:20pm Fri 4 Nov 2011   Share   Quote   Permalink   Like (3)   Dislike   Protected   If I need to know that a restaurant is so shabby and repulsive that it needs to give half off deals to get people to slurp their swill, I check out the GRoupon listings and then call the health department and tip them off.

27. zzyzzx Follow Befriend (9) 414 threads 4,132 comments Baltimore, MD

    30   11:13am Tue 8 Nov 2011   Share   Quote   Permalink   Like   Dislike   I have never used a GROUPON and probably never will.

28. thomas.wong1986 Follow Befriend 16 threads 4,426 comments

    31   7:44pm Wed 9 Nov 2011   Share   Quote   Permalink   Like   Dislike (1)   thunderlips11 says Based on new accounting using CSOI, Groupon said today it had a loss of $181 million last year, compared with adjusted CSOI of $60.6 million in a filing last month. Groupon’s unusual approach to accounting may have caused “digestive problems” with the SEC, possibly delaying the initial public offering by one month, Richard Sauer, a former official at the government agency, said last month. Many new media companies and game companies are restating or have restated their Revenue and bottom line earnings. Non traditional products give rise to new accounting treatment. They were restated because the auditors didnt give Unqualified Opinion on the audit report and the 20something year old CEO crapped into his pants. And to make things even worse many running these companies CFO down to staff dont even have a clue or an accounting degree... pretty scary stuff. http://online.wsj.com/article/SB10001424053111903635604576472531846174782.html

29. everything Follow Befriend (2) 3 threads 548 comments Madison, WI

    32   8:35pm Wed 9 Nov 2011   Share   Quote   Permalink   Like   Dislike (1)   Groupon is kind of like a RE transaction, all the different little cuts and pieces of the transaction going to different parties, you know the American way of sucking you dry. Also, as newsprint goes, so does the medium for couponing that way. In a way they are still looking for a niche? I have not been to groupon.com but they seem to be strictly advertising, marketing, etc. Groupon reminds me of my pals who tell me how much they save by using credit, well hello, they just jack up the price and we all pay more as a result. Groupon is on that same plane. Groupon will attract more loss leaders, things to get you into the store. Groupon to me is consumerism gone awry. If Groupon can gain exclusivity with corporations they may be on to something. Could be a great way to clear almost expired product off the shelves of grocery stores instead of throwing it away. To bad they are more about $, vs. the common good of man. Just my 2 cents..

30. thunderlips11 Follow Befriend (13) 51 threads 2,636 comments Premium

    33   10:53am Tue 22 Nov 2011   Share   Quote   Permalink   Like   Dislike   Protected   Yet another Groupon Fail! Grouponers cost London Cupcake Baker $20k: http://www.nbcchicago.com/news/local/Baker-Forced-to-Make-102000-Cupcakes-for-Grouponers-134312058.html Same situation played out as with Posie's Cafe. Maybe it works for spa treatments and other shit that is padded heavily, but doing Groupons for restaurants and bakeries that don't have huge margins may not be a great idea.

31. thunderlips11 Follow Befriend (13) 51 threads 2,636 comments Premium

    34   11:33am Tue 22 Nov 2011   Share   Quote   Permalink   Like   Dislike   Protected   Chart making a claim that groupon customers are are more likely to review, but give worse reviews, than non-groupon customers: From: http://www.theatlanticwire.com/technology/2011/09/more-evidence-groupon-bad-business/42348/

32. corntrollio Follow Befriend (5) 27 threads 2,073 comments

    35   2:35pm Tue 22 Nov 2011   Share   Quote   Permalink   Like   Dislike   thunderlips11 says Chart making a claim that groupon customers are are more likely to review, but give worse reviews, than non-groupon customers: Are the deltas in that chart even statistically significant? The scale on the left is making some fine distinctions between 3 stars and 4 stars. I don't doubt that Groupon users are generally low quality customers and are known for being jerks sometimes. In fact, if you read some merchants' accounts of having used Groupon (Posie's Cafe I mentioned above), Groupon users generally are more likely to blackmail merchants by threatening a bad Yelp review in order to circumvent the requirements of a Groupon (e.g. "waive the minimum purchase, or I will write a bad Yelp review"). This happens whenever you have bargain basement customers.

33. thomas.wong1986 Follow Befriend 16 threads 4,426 comments

    36   4:19pm Tue 22 Nov 2011   Share   Quote   Permalink   Like   Dislike   Pretty insane stuff Groupon Market Cap: 12.80B Compare to Nasdaq OMX Group Inc at 4.44B The NASDAQ process billion transactions daily and show revenue at $3B with PE at 10x earnings. Crazy crazy stuff...

34. mdovell Follow Befriend (4) 28 threads 776 comments

    37   7:15pm Tue 22 Nov 2011   Share   Quote   Permalink   Like   Dislike (1)   thunderlips11 says I joined Groupon looking for grocery coupons, restaurant discounts, etc. - things I consume regularly. All I got in my email were invites to Belly Dancing Classes, Skydiving, Hovercraft Trips in the Mosquito Infested Everglades, and Lingerie Shops, none of which are useful to me, nor things I use regularly. Nor would I make anybody suffer through watching my hairy ass belly dance in lingerie. Groupon is great if you have disposable income and are looking to fill up a weekend with a fun activity or two. But I haven't seen anything that saves me money on things I need or want on a frequent basis. Pretty much.. Thunder called it..stock is down to IPO levels..that only took three weeks.

35. thomas.wong1986 Follow Befriend 16 threads 4,426 comments

    38   9:48pm Tue 22 Nov 2011   Share   Quote   Permalink   Like   Dislike   thunderlips11 says Groupon is great if you have disposable income and are looking to fill up a weekend with a fun activity or two. You dont need Groupon to do that, just some sense of adventure.

36. FortWayne Follow Befriend (13) 102 threads 3,763 comments

    39   6:27am Thu 24 Nov 2011   Share   Quote   Permalink   Like   Dislike   thunderlips11 says Not a lot of repeat business comes out of Groupon. What business can keep offering 50% off and stay in business? There really isn't a 50% off. I have a lot of friends who are in the restaurant business. Profit margins are too low to offer anything close to 50% off. There discounts are typically offset somewhere. There is a lot of competition in the restaurant business, it is a reason why everyone in the kitchen is a part time illegal working for cash.

37. thunderlips11 Follow Befriend (13) 51 threads 2,636 comments Premium

    40   10:14am Fri 25 Nov 2011   Share   Quote   Permalink   Like   Dislike   Protected   FortWayne says There really isn't a 50% off. I have a lot of friends who are in the restaurant business. Profit margins are too low to offer anything close to 50% off. There discounts are typically offset somewhere. Loss-leading, Ft. Wayne. Many restaurants participating in Groupon take a loss in the hopes of attracting lucrative regular customers. Unfortunately, this seldom happens since Grouponers will go out of their way for 50%, but not to pay regular price. There's a reason why most of the Groupon deals are for spa treatments, stripper pole dancing lessons, etc. The margins are so high in those businesses, and their costs of delivery are flat (ie There is a flat $5000 rent on the spa place, regardless of how many customers are served there; whereas a restaurant has to pay ingredients for every meal, which can vary greatly on volume buys - bakeries are extremely vulnerable to this - one unpaid, cancelled order could spell the end. Not to mention other things, spas can build reservations across many days, whereas restaurants get slammed by Groupon during Peak hours and can't spread the visits out by appointment like manicure places can), they can offer 50% and still make something.

38. Fantom Follow Befriend 11 comments

    41   1:27am Sat 26 Nov 2011   Share   Quote   Permalink   Like   Dislike   I've been buying a lot of Groupon deals lately but they are all for vendors I am already a customer of and I would go there and buy these services anyway.

39. AdamCarollaFan Follow Befriend 40 comments Sacramento, CA

    42   3:34pm Wed 14 Dec 2011   Share   Quote   Permalink   Like   Dislike   here's a good article re: groupon that turned me into a non-believer: http://www.bargaineering.com/articles/social-deal-sites-groupon-worth-it.html there's definitely a segment of grouponers are so into the bargain, they'll move on to the next groupon deal without necessarily becoming a repeat customer of the first.

40. AdamCarollaFan Follow Befriend 40 comments Sacramento, CA

    43   3:36pm Wed 14 Dec 2011   Share   Quote   Permalink   Like   Dislike   tony manero says: "If I need to know that a restaurant is so shabby and repulsive that it needs to give half off deals to get people to slurp their swill, I check out the GRoupon listings and then call the health department and tip them off." comedy!

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