If you're using Groupon deals as a quick way to get some cash in order to float your business then you're doing it wrong. Considering the way Groupon's payment terms this whole premise of "using a groupon deal" to make payroll doesn't even make sense. I'm tempted to call bullshit on this whole article.
There's a lot of hate out there for Groupon, some of it deserved, but this one is a bit of a stretch.
> So if Groupon stopped giving cash up front they shouldn't lose any customers they need, right?
That's not strong supporting evidence. Cash up front is one of the incentives that Groupon uses to acquire customers. Dropping it would certainly lose at least a few customers. They have a shit-ton of customers, doing many things would lose them customers. But it's not the core value proposition of Groupon.
Now if Groupon stopped advertising your business and discount to their enormous email list and only gave you cash advance in exchange for future revenue and they don't lose much business, then it starts looking more like what the OP claims.
Anyone that uses a check cashing business or accepts a bad loan is probably doing it wrong too, but that doesn't stop millions of people from doing those things. Regulating that kind of thing is a good idea. To be fair though, I don't know enough about Groupon's terms to say whether the comparison is fair.
If you want to argue for consumer protection, that's one thing. But anyone who goes into business really needs to know better, and if they don't, you really can't protect them from themselves.
I mean, it would be another thing if Groupon was systematically defrauding smaller merchants, but I've not seen allegations to that effect.
Maybe the fact that these services are popular should be a signal that they provide a value that you happen not to understand (or have a use for at this time).
Entrance into contracts by free individuals: legalize it.
If you've subscribed to Groupon long enough, you'll see some businesses re-appear on their rotation. While some businesses have been burnt by over-selling, it's hard to imagine completely suicidal business owners coming back to keep losing money.
Groupon is really good about giving credit (full value) to customers with expired Groupons. Does Groupon still payout to the businesses when they are essentially refunding purchased Groupons?
There is nothing sustainable about this model...but it works for me!
Some merchants may use Groupon this way. Others use it the same way that they do any other advertising service; as a technique for getting their foot in the door, so to speak. For those who use this as a way to get fast cash, this article - and whatever service Womply is providing - may be useful. For those who use it as yet another avenue for advertising, alongside weekly coupons in the newspaper and ads on television, this article is irrelevant.
Given Groupon's published payment terms, this article is a little odd:
http://www.groupon.com/pages/merchant-terms-of-service-1 (see 4.3). It seems they're paying merchants only after coupons have been redeemed. So in reality, merchants get their cash later than for regular purchases.
Of course these default payment terms can be overridden in a custom agreement, but I wonder how often this really happens?
^^^This is an accurate and very important rebuttal. Groupon has taken flack precisely because its cash flow depends on delayed payments to vendors. The vendors emphatically do not get paid up front.
If they did, Groupon would actually not be in business right now. The amount it owes vendors exceeds its cash, but by the time it has to pay it has sold more Groupons. In other words, Groupon pays old liabilities with new ones (this is, obviously, a point of intense controversy).
Not according to their S-1: "Our current merchant arrangements are structured such that we collect cash up front when our customers purchase Groupons and make payments to most of our merchants at a subsequent date. Under our traditional merchant payment model, we pay our merchants in installments over a period of generally sixty days for all Groupons purchased."
According to their current merchant terms it's a payment after 30, plus every two weeks after that on any balance.
Under this bizarre classification scheme, I'm pretty sure anyone who sells anything with a payment plan rather than requiring full payment up-front is also an unauthorized check-cashing company.
- payday loan companies are a liberal bugaboo that prey on consumers with limited options available for securing the cash they need to feed their children
- zomg our competition is like them somehow, except the prey are...companies with lots of flexibility in how (and whether) they market at any particular time
I'm calling BS (or at least poor research) on the story. I personally know 4 businesses that did groupon deals, and none of them got the money up-front. In fact one of them had the opposite problem, and it took several months to get the check (The account rep had apparently screwed up some paperwork, got fired, and it took a while to get straightened out).
Also, how would groupon even know what the check amount should be up front? I guess they have some history on how many deals they sell by type / geo at this point and could estimate, but it seems risky (on both sides).
Maybe groupon does advances for larger businesses or national brands, but I don't think they are the ones who would need to raise quick case.
This is a little bit like, oh... Opera writing a blog post about how you shouldn't use Firefox because it won't display any Google page.
...ie, it would be very important and interesting if true, but it's 1) not true, and 2) trivially verifiable as not true.
Groupon works in the precise opposite way of how Womply claims they do; they provide payment to the vendors well AFTER the voucher is used, not BEFORE the voucher is used. Every single point and conclusion made by Womply is not just wrong, but describes a world precisely opposite to the one we actually inhabit.
I have never heard of Womply before, but apparently they're run by fools. At best they have no clue how their competition does business. More likely they do know, but assume that their customers don't, and feel no compunction about lying. Either way...
We've surveyed over 1600 Groupon merchants, and 75% say they would like to use Groupon again. In general, it seems they are pretty satisfied.
We did a text analysis of over 150,000 words of open-ended responses:
* Fewer than 2% of all these merchants even mentioned "cash upfront" as a benefit of running a deal. Not a single one mentioned it as a primary benefit/drawback.
* A few merchants did in fact complain that Groupon sometimes held on to the cash a little TOO long before funding their accounts
* FYI, the top stated benefits were "New Customers" and "Advertising Effect".
Groupon is in no way perfect, but its characterization as a check casher is pretty silly. I'm sure if you hunt hard enough, you can find an unhappy Groupon merchant and put words in their mouth.
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[ 34.6 ms ] story [ 1087 ms ] threadThere's a lot of hate out there for Groupon, some of it deserved, but this one is a bit of a stretch.
So if Groupon stopped giving cash up front they shouldn't lose any customers they need, right?
That's not strong supporting evidence. Cash up front is one of the incentives that Groupon uses to acquire customers. Dropping it would certainly lose at least a few customers. They have a shit-ton of customers, doing many things would lose them customers. But it's not the core value proposition of Groupon.
Now if Groupon stopped advertising your business and discount to their enormous email list and only gave you cash advance in exchange for future revenue and they don't lose much business, then it starts looking more like what the OP claims.
I mean, it would be another thing if Groupon was systematically defrauding smaller merchants, but I've not seen allegations to that effect.
Entrance into contracts by free individuals: legalize it.
There is nothing sustainable about this model...but it works for me!
If they did, Groupon would actually not be in business right now. The amount it owes vendors exceeds its cash, but by the time it has to pay it has sold more Groupons. In other words, Groupon pays old liabilities with new ones (this is, obviously, a point of intense controversy).
http://www.businessinsider.com/groupon-low-on-cash-2011-8?op...
"...it collects cash from Groupons the moment it sells them and doesn't have to pay some of the cash to merchants until 60 days later..."
The customers have long come and gone before GroupOn sends you a check.
The rest of this post is thus redundant.
According to their current merchant terms it's a payment after 30, plus every two weeks after that on any balance.
The "argument" seems to be:
- payday loan companies are a liberal bugaboo that prey on consumers with limited options available for securing the cash they need to feed their children
- zomg our competition is like them somehow, except the prey are...companies with lots of flexibility in how (and whether) they market at any particular time
Also, how would groupon even know what the check amount should be up front? I guess they have some history on how many deals they sell by type / geo at this point and could estimate, but it seems risky (on both sides).
Maybe groupon does advances for larger businesses or national brands, but I don't think they are the ones who would need to raise quick case.
...ie, it would be very important and interesting if true, but it's 1) not true, and 2) trivially verifiable as not true.
Groupon works in the precise opposite way of how Womply claims they do; they provide payment to the vendors well AFTER the voucher is used, not BEFORE the voucher is used. Every single point and conclusion made by Womply is not just wrong, but describes a world precisely opposite to the one we actually inhabit.
I have never heard of Womply before, but apparently they're run by fools. At best they have no clue how their competition does business. More likely they do know, but assume that their customers don't, and feel no compunction about lying. Either way...
We did a text analysis of over 150,000 words of open-ended responses:
* Fewer than 2% of all these merchants even mentioned "cash upfront" as a benefit of running a deal. Not a single one mentioned it as a primary benefit/drawback.
* A few merchants did in fact complain that Groupon sometimes held on to the cash a little TOO long before funding their accounts
* FYI, the top stated benefits were "New Customers" and "Advertising Effect".
Groupon is in no way perfect, but its characterization as a check casher is pretty silly. I'm sure if you hunt hard enough, you can find an unhappy Groupon merchant and put words in their mouth.