Groupon fudges popularity of deals

Just how many people bought into that offer you're looking at? The deal counter is no longer accurate.

By MSN Money Partner Oct 12, 2011 6:45PM

This post comes from Seth Fiegerman at partner site MainStreet.

 

MainStreet on MSN MoneyGroupon just made it a little more complicated to track the popularity of deals on its site.

 

The group-discount website decided to conceal just how many vouchers are sold for each deal advertised on its site by reducing the number shown in the deal counter "by a random percentage -- sometimes 0.5%, sometimes 19.5%, or anything in between," the company announced in a blog post Sunday. Now, if a business sells 20 vouchers on the site, Groupon might instead advertise that it has sold "over 17."

 

Why go to all the trouble of tweaking the system to promote a less precise sales figure? The short answer is to throw off analysts, though Groupon puts it a little differently.

 

"(S)ome clever people are using the counter to make (consistently incorrect) estimates of our total company sales, which we don't like for the same reason you probably wouldn't like if people tried to guess your weight all day," the company wrote. "This change is meant to continue to reflect deal popularity while making it clearly impossible to predict our sales."

 

At first blush, knowing the precise number of items sold might seem like an unnecessary detail. After all, how often do you walk into a grocery store and ask for sales figures on each kind of cereal? But as Groupon itself says in the announcement, customers use the deal counter to gauge the popularity of particular offers. For some customers, finding out how many other users decided a deal was good enough to buy might impact their own decision about whether or not to make the purchase. Post continues after video.

The deal counter also serves as one more way for businesses to advertise the popularity of their products, so randomly lowering the sales figures by as much as nearly 20% could significantly understate a company's success on the site. However, Groupon argues the change to the deal counter shouldn't have too great an impact on consumers or businesses.

 

"Consumers buy our deals because they're high-quality businesses and the experience is too good to pass up, not because a deal has sold 250 versus 300," Julie Mossler, Groupon's director of communications, told MainStreet. "Those who know us realize it's a competitive space and there's little to no effect on a merchant by noting a deal is selling well without giving the specific number sold."

 

Even so, there is a more fundamental issue here: Groupon has effectively decided to be transparent about the fact that it will now be less transparent about a key piece of sales information. Mossler says that in disclosing the change, the company showed just "how much we value our relationships with customers," but the question remains. Does disclosing an effort to conceal sales data make it any better?

 

More on MainStreet and MSN Money:

VIDEO ON MSN MONEY

9Comments
Oct 13, 2011 5:28AM
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This is no big event.  If I'm not already familiar with a restaurant or other business, I can usually tell in a few minutes if it's a deal I want by checking reviews.......Urban Spoon, Yelp, etc.  My bigger concern is remembering to actually use something I've bought!

Oct 13, 2011 12:06PM
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I smell something fishy with this company. They use their own accounting terminology to show "more realistic numbers", using a term called Adjusted Consolidated Segment Operating Income. ACSOI reports the company's operating income minus several major expenses: marketing and acquisitions. The company spent $263.2 million on marketing and $203.2 on acquisitions in 2010, those seem to me to be worth including in your income. The company claims it posted a profit of around $10 million with its ACSOI method, but using Generally Accepted Accounting Principles in the United States (GAAP) it actually booked a $456.3 million dollar loss in 2010. This new method of hiding the actual number of people who took advantage of a deal seems sketchy to me also. My guess is that their sales figures are dropping due to increased competition and they do not want people to find that out by tracking the actual number of deals taken. So they are somewhat correct, I believe, in outsiders trying to trace their sales, but they should have nothing to hide.
Oct 13, 2011 10:25AM
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ahh.. so here we go again.. another greedy company.. instead of trying to impress their customers, they want to impress the stock market.... i like groupon.. and i liked ebay too, until they started to try to impress the stock market instead of protecting their sellers.. 
Oct 13, 2011 7:50AM
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I'm not happy about the change.  I don't buy based on popularity,  but the number of deals sold definitely weighs in whether I buy or not.  When I see that a particluar deal has sold over 2,000 (to a seasonal event, with weekend only redemption restrictions)  I most certainly skip the deal and give my business to the guy next door. 
Oct 13, 2011 8:48AM
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Never mind,  I went to their website.  It's not for me.  Now i don't care what they do on their site.
Oct 13, 2011 8:31AM
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I think they have to do this because after all the restrictions it ends up being less of a deal, so less and less people are buying into it.
Dec 25, 2011 11:10PM
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there's way to many restrictions on deal sites honestly i went to resturant.com and got a $25.00 gift card 20% gradtuity which has to be in cash (not a problem) + $7.00 and you must spend at least $35.00 at the end of the night we ended up actually spending $27-$33.00 which we never figured out were did our $25.00 gift card go.

Oct 13, 2011 8:53AM
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A few weeks back I received an update from my bank telling me that I had over 440 dollars taken out of my account, which I did not know about. After checking it out and the bank doing there job we found that it was Groupon taking the money out. I had, up to this point, never heard of Groupon and I was never on there site. It was returned to my account after a few days but, I always wonder how was it taken out in the first place?
Anyone else have there bank account hijacked? I know it wasnt Groupon itself but, someone was buying something with my account from there.

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