Kevin Warnock

Entrepreneurship, ideas and more

Groupon is a bad idea

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According to Groupon IPO on hold as SEC questions pile up, it appears that Groupon is having trouble going public.

Maybe people are realizing that selling currency for half price and then giving only half of that amount to the merchant is not sustainable.

Groupon would not be doing so ‘well’  if small businesses had better access to affordable loans.

I feel Groupon is taking advantage of merchants, who jump at the chance to get a check for thousands of dollars up front, while not recognizing they are committing their businesses to deliver goods or services priced 4 times more than the amount of the check they get.

Is USD $25 today worth having to pay back USD $100 in the near future?

I don’t think so, and I believe nearly all merchants over time will agree with me.

This might take five years for the story to fully spread to unsophisticated merchants, but when the story is fully known, Groupon and its clones will have to find something else to do to stay in business.

Do not invest.

Do not buy Groupons or similar financial instruments from Groupon’s competitors. Their products cheat business owners.

I put Groupon in the same category with payday advance lenders, rent-to-own stores and tax refund anticipation loan providers.

Written by Kevin Warnock

September 6th, 2011 at 3:48 pm

Posted in Opinion

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