Groupon dirty secrets… Groupon employee reply back


The other week I wrote an article about Groupon. This article was very popular on hacker news. It was my biggest story over there since a long time.

However this story happened at a very bad time (laugh) because I was switching to new severs. I experience too many downtimes. I am very happy that more then 20 000 visitors enjoy that story.

My article was not complete and I could have done a better job (my graph) but overall I love it. Today I want to share a comment from a Groupon employee:

[Groupon Employee Speaking]

Keep in mind that when that study was done (June 2009), Groupon was 9 months old. Since then, Groupon has expanded to dozens of countries and hundreds of cities, raised over $1B, hired thousands of employees, and refined its processes a zillion-fold.

It’s no secret in the company that our long term success is based on a) customers having great experiences, and b) merchants getting a return on the cost of their discount and fees to us. Everything is viewed through those two values. Deals are scheduled so that customers are always delighted (e.g. so there aren’t 4 steakhouses in one week), and sized so that merchants don’t get raped by the economics (e.g. if a typical bill at a restaurant is $100, then the deal might be $60 for $30. Also, quantity is estimated based on the merchant’s capacity as well so that merchants don’t get overwhelmed and customers still get a good experience. In the video for the recent Japanese new year debacle (http://news.ycombinator.com/item?id=2111609), Andrew mentions that deal sizing and scaling is already done in some markets and in response to the Japan incident, will now be done in all markets to ensure the experience continues to be good for everyone. Short-term profit maximization isn’t what builds lasting businesses, and the execs here know it.

With something growing as ridiculously fast as Groupon, data get stale fast. It’s like if you found a study from 2006 where someone complained that they couldn’t find anyone they knew on Facebook.

It’s always wise to take a company’s numbers with a grain of sale, but with a fast growing company, the numbers they selectively release are usually the best you’re going to get.

Now my comment:

Yes, the data is old (2009) and yes the company was young (it is a young company). However Groupon has a huge after customer service problem. (it is better every month….)

I will not talk about the mess in Japan…. It is deeper than that… Many real local businesses (at least in Montreal) are doing a fantastic job to make it better than Groupon.

Even thought the numbers I publish are old I still find the same numbers in 2011. That does not mean Groupon is a bad service. It is a good service. It is good but not great. Not being great is a huge problem in this very competitive and new market.

I collect and track the whole Groupon experience from a merchant perspective.

So stay tune for that killer article with numbers and tips that you may like.

On another note, I think there is better service than Groupon out there. LivingSocial and Beyond the rack are hot right now. I am testing Beyond the rack (they are a Montreal start up) right now.

I will talk about my whole experience with Beyond the rack later. (After I receive my product)

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