I wrote yesterday about Groupon offering a deal for a cafe which doesn't yet exist, and won't be built until after the vouchers have expired. And I also wrote about the Harley Fit Clinic in London, which changed residence and quickly went out of business following Groupon's offer.
So this got me thinking, who benefits from a Groupon offer for a business which is failing and is close to bankruptcy.... if the business does exist at the start of the deal, but quickly goes into liquidation or bankruptcy and is unable to redeem the vouchers.
Groupon gives the money to business owners in installments, based on how many vouchers have been redeemed. The business owners do not make any money if they don't redeem any vouchers. Groupon keeps all the money from unredeemed vouchers. So Groupon is making a large profit off of business owners who are close to going bankrupt. In fact, Groupon stands to make a lot more money if the business goes under!
Struggling business owners may think that by offering a deal on Groupon, they will get more advertising, and bring in more customers. This advertising has hardly helped the Harley Fit Clinic which has gone under before being able to welcome new customers into their business.
Groupon is the only one who is making money offering vouchers for struggling businesses. The customers and the business are sadly both losing out.
Small business owners who are struggling in these tough times should think twice before dealing with Groupon. Groupon's priority is making a profit. Groupon's sales reps are only trying to make a commission. In fact, Groupon stand to make a larger profit if your company fails. While you hope offering a deal may help your struggling business, it may run your business into the ground....
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