From its inception, Groupon (NASDAQ:
) has been praised by consumers for providing killer deals at
The Gap (NYSE:
), Starbucks (NASDAQ:
) and American Apparel (NYSE:
) are among the biggest firms that have given consumers a
Groupon is not just about promoting the biggest retailers and
coffee shops with vouchers for 50 percent off. The site is very
much a tool for small and growing businesses to advertise. This
has allowed millions of consumers to discover new places that
they may have otherwise missed.
On the downside, it has also led to a number of high-profile
complaints, including a man who
that Groupon destroyed his waffle shop.
Ashley Coslett begs to differ. She owns the Awful Waffle in
Salt Lake City, Utah. After one successful Groupon campaign, she
came back to Groupon -- not once, but twice.
In her testimonial on
, Coslett praised Groupon's ability to help businesses reach new
"Groupon really reaches out to a demographic that normally
would not have been reached because our typical demographic are
college students kind of going to class or coming out on a date
night, but because of Groupon, we've had a lot of families come
in, a lot of older people that have no idea what the Awful Waffle
is," she claimed.
While the Awful Waffle merely expanded its potential customer
base, Carolyn Franks believes that Groupon saved her petting
"We went from about 200 visitors a week to 2,000 visitors a
week, and with the Groupon money, we increased the number of
pens, the number of animals," Franks, who owns ZOOMARS in Orange
County, California, said in her
. "We were able to make the zoo bigger because of so many new
customers coming from Groupon."
Franks has used Groupon seven times to promote her
Destinee Wagner has done the same. She owns Growing Younger, a
medical weight loss, anti-aging and anesthetics clinic in
"We have chosen to work with Groupon more than once because we
have seen a growth in our business since working with Groupon,"
Wagner proclaimed in her
. "I would say it's been about a 40 percent return."
All told, there have been
more than 1,000 positive case studies
published on Groupon Works.
Citing a report from ForeSee (a customer satisfaction and
analytics company), Groupon
one key statistic: "91 percent of daily deal customers have
already or plan to conduct business with the merchant again since
buying the deal."
With so much praise -- and a high rate of customer retention
-- where are all the negative reports coming from?
about Back Alley Waffles.
"Due to the shocking business practices of an obscenity known
as 'Groupon' -- contemptible even by the nearly non-existent
standards of the modern corporation -- I can no longer afford to
sell waffles for $8.00 and still pay, for example, my employees
something north of a subsistence wage," the former restaurant
wrote on its website
. "Therefore, starting now, waffles are $450.00 each and are
available by appointment only."
Groupon defended itself by detailing why
it did not
cause Back Alley Waffles -- which was located in Washington, DC
-- to go under. Back Alley
responded to Google's remarks
in an attempt to salvage the company's image.
However, it turns out that the restaurant was going to be shut
down anyway because it was not
legally allowed to sell food
Regardless, Back Alley Waffles' closure is the most commonly
reported negative story associated with Groupon.
There are a handful of other (lesser-known) negative reports
as well, including a Chicago, Illinois man who claims that
Groupon deals never disappear.
"Understand that carefully," the man wrote in his
. "GROUPON WILL NEVER DELETE OR REMOVE THE DEAL FROM THE WEB.
"…So now, almost on a daily basis, I am getting people coming
into our business saying, they are not paying the price we charge
when others got this deal. They want the deal we offered on
Groupon 6 months ago.
"End result of doing business with Groupon... No money from
the deal / no sales and 100s of future customers upset and angry
because we cannot give them the deal they constantly see
, a bakery and cafe in Portland, Oregon, is also frequently cited
as a case against Groupon. However, the restaurant's owners do
not blame Groupon for their troubles.
"I take full responsibility for my decision, as you will read
in the post below," they
in a blog post. "Please do not attempt to interpret this post as
me blaming Groupon or our customers for anything. I am merely
sharing the experience. The decision to run a Groupon campaign
was my own decision, and one I regret. Lesson learned."
Thus, Groupon may not be for everyone -- but it seems that the
negative reports have been greatly exaggerated.
Full Disclosure: Lightbank, the technology investment vehicle
from Groupon co-founders Brad Keywell and Eric Lefkofsky, is
one of Benzinga's investors
Louis Bedigian is the Senior Tech Analyst and Features Writer
of Benzinga. You can reach him at 248-636-1322 or
louis(at)benzingapro(dot)com. Follow him
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Profit with More New & Research
. Gain access to a streaming platform with all the information
you need to invest better today.
Click here to start your 14 Day Trial of Benzinga