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May 20, 2010

The heavy hand of Groupon

I have been in the technology business for a very long time.  There is always a darling of the moment.  One such darling is Groupon (disclosure my company Tippr is in competition with them).  I am always intrigued by how many of these darlings screw up their position and customer good will by being heavy handed in some clumsy way.  Facebook is getting the riot act recently over their heavy handed Privacy Policy changes.  Google has lost some luster over collection of the geocode of your home WIFI (and sucking some data) without your consent.  Groupon seems to still be in the honeymoon phase, but there are an increasing number of cracks starting. 

Most people saw that Groupon was sued in class action for violating consumer protection laws and quickly settled it with an offhand joke.  I don’t tend to think flaunting consumer protection laws is a joke. 

Three more came through our merchant calls at Tippr this week that the general public doesn’t know about yet.  I am just here to help.

First up: the “Groupon Platinum Partner program”.  Google it and you will find nothing.  It is not on their web site, not in any of their press.  Because it is a 24 month exclusive contract with a Merchant that locks out any other group buying or on-line promotion partner for the merchant.  The terms would make Microsoft lawyers proud.  Merchant signs up for 24 months to only offer daily deal promotions through Groupon.  Groupon pays a spiff in the back-end if the contract is upheld.  Now of course any two businesses can decide to have an exclusive relationship anytime they want.  But this contract goes beyond the pale in terms of penalties on merchants and the scope of exclusivity.  What if Groupon underperforms your expectations, would they sue? Are you allowed to cancel?  Good questions.  Locking in your merchants with lawsuits is very heavy handed. 

Next up: “I’m from Groupon and I am here to sue you”.  Groupon’s merchant contract used to say you can’t run a better deal within 60 days of running on Groupon.  Now that there is real competition (Tippr, etc.), it says you can’t run ANY deal within 60 days of Groupon.  Yesterday over at Tippr Boston, we featured a great local merchant.  They ran a Groupon 58 days ago.  2 days to go.  A lawyer from Groupon called and threatened to sue to recover all revenue paid to from Groupon during their last promotion.  Did I mention it was only two days?  Way to build merchant trust guys.  Tippr of course does not have the exclusive language, only the “better deal” language.  Tippr took down the offer as a service to our merchant, and are looking forward to featuring them again soon after Groupon’s lawyers cool off.  Made me smile a little that Big Boy Groupon cares about little guy Tippr.

Frequent readers already read my Groupon API rant.  Again, heavy handed “you must follow Groupon’s view of the world and can’t show my deals with anyone else’s” tactics.  Developers are significantly limited in what they can do with the data. They are also restricted from showing Groupon deals along side any other deals (like all the aggregators are doing).  That is basically putting yourself above the fray.  Fine, you are the big dog you can do that.  But don’t try to put on a happy friendly face and expect to get credit for being a good corporate citizen because you are not.


I appreciate Groupon’s trail blazing efforts to expand awareness about group buying.  Keep executing your don’t play nice with others or merchants strategy.  I think it is a winner.

Posted by Martin at May 20, 2010 2:54 PM

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Keep executing your don’t play nice with others or merchants strategy. I think it is a winner.

Posted by: Cliff Rudolph Author Profile Page at May 21, 2010 12:44 PM

Hi! I hear a lot about these negatives on groupon. If youcan please send me a sample of groupon merchandising agreement. Thank you

Posted by: Iceah08 Author Profile Page at December 2, 2010 10:58 AM

gropon continues to give consumers great deals and they themselves make a profit of each item sold but the business actually losses profits in the end. @http://peopledeals.com/#p=1 our mission is to help the business increase there ROI and please there consumers with better deals. check us out and see how you can get signed up today! http://peopledeals.com/register/r/jdailey

Posted by: Josh Dailey Author Profile Page at August 22, 2011 5:01 PM

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