For a company that reportedly rebuffed Google's (Nasdaq: GOOG) $6 billion offer, Groupon seems to be making headlines for all of the wrong reasons these days.
A week that began with three controversial Super Bowl ads that were eventually pulled ended with a botched national offer from United Online's (Nasdaq: UNTD) FTD.com.
The FTD deal seemed timely enough, offering $40 worth of floral arrangements for $20 ahead of the potent Valentine's Day weekend. However, controversy erupted when some buyers noticed that some of the prices being charged to Groupon participants were higher than the sale prices on FTD.com itself.
FTD argues that the vouchers specified that they weren't valid on sale items, but enough voucher buyers complained about being misled to the point that Groupon pulled the deal. Groupon and FTD also have offered refunds and credited accounts for pricing imbalances.
This isn't Groupon's first run-in with a deal that was too good to be true. There have already been a few brand-tarnishing incidents, including vouchers that weren't honored at a Brazilian club event and a Japanese meal that wasn't up to snuff. I had even spotted three questionable deals in my home state of Florida that weren't up to par last month, including one from a Caribbean travel agency where the website was offering better deals than the voucher itself.
Groupon may be at a tipping point. The site's popularity has attracted plenty of sponsors, allowing the site to offer more city-specific discounts. However, deal quality may be starting to suffer as the result of inadequate vetting.
Groupon has tried to be so cute with its write-ups that many savers are getting confused with the deals being offered.
This is no time to slip up.
Amazon.com (Nasdaq: AMZN)-bankrolled LivingSocial sold more than 1.3 million half-priced Amazon.com gift cards in a single day last month. Google is introducing Google Offers. AOL's (NYSE: AOL) Wow.com and CBS' (NYSE: CBS) CBSLocal.com are proving that this is no longer a niche for hungry upstarts.
Groupon closed out 2010 with a presence in 35 countries; that's 34 more than when the year began. It completed a $950 million round of financing last month. Outside of Facebook and perhaps Twitter, Groupon is the most valuable upstart that investors are hoping goes public soon.
Will the model unravel before Groupon nails the opportunity to cash in on its rapid success? I doubt it, but notoriety and slips-ups are getting a little too loud to ignore.
Have you ever bought a Groupon deal that didn't work as planned? Share your experience in the comment box below.
