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19/10/2011 by

Is Groupon The New Internet Bubble?

Last week we posted about Groupon’s Air Fast Tickets deal,  which Groupon’s was quite positive about the benefits for its users, even though we, including many of readers, found out that this was defintely not always the case.

In the Netherlands Groupon sold over 2300 ‘vouchers’ and in Belgium, a smaller country than the Netherlands, Groupon sold even over 5000 vouchers. But besides succes, also some major critism arised as “the promotion was contrary to the Law on Belgium Market Practices”, according to Johan De Meester, Secretary of the Flemish Association of Travel Agents.

“The customer doesn’t know exactly how much he pays in the end. The tickets do not include airport taxes and fuel allowances. That is not acceptable. Therefore, we’ve filed a complaint with the Economical Inspection.”

One of our Belgium readers mentioned an article on, one of Belgiums’s biggest newspapers. We checked the Belgium “deal” and saw that Groupon was far more clear about the conditions, compared to the Dutch ‘deal’. Perhaps that the call with Groupon Travel’s CEO helped? That would be cool, if they actually listened. Although we still believe that as a CEO you shouldn’t refuse posting a comment on such an article as we wrote.

Back to the Belgium article, because below this article an interesting Google ad was displayed.:

In English: Airline Tickets -70% – recieve offers airline tickets with 70% discount, here!

And on YouTube we found another one with a similar message:

Again examples from Groupon that tends to mislead. Looking forward to recieve the first air ticket deal that actually has 70% discount. What do you think?

US Blogs and newssites vs. Groupon

In the US some blogs and newssites are posting almost on a weekly base about Groupon and doubtly cases. for example recently posted about the fact that Groupon and LivingSocial are “Absolutely inflating regular prices to make deals look better“, and that this even getting worse.

Ten vendors offering daily deals were called (five from Groupon and five from LivingSocial) and found eight instances where they were quoted a price over the phone that was cheaper than the advertised regular price being offered.

The interesting part of this case is that a former LivingSocial sales rep got in touch after reading the posting and mentioned some reasons why these things occur, what could be a reason why Groupon is offering doubtful “deals” like the one from Air Fast Tickets:

  • Sales people do so intentionally because they are under huge pressure to meet their ever-increasing sales quotas. Our source said LS sales reps are responsible for bringing in 20 new clients every month.
  • Merchants will inflate the regular price they give to sales reps in order to make more money. The reps don’t have time to do due diligence on every deal, so the inflation slips through.

What are your thoughts? Why is Groupon promoting itself with ads and “deals” that tend to mislead? Is Groupon perhaps a new internet bubble that is trying to force more growth?



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Laurens Bianchi
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