Friday July 15, 2011

 

Business

Groupon Greed

Is it killing small business?

Released by Everybodybuys.com

 

new North American website is offering an ethical and sustainable alternative to profit-hungry online group discount companies like Groupon, that have been accused of exploiting retailers, putting small businesses in jeopardy of bankruptcy and customers at risk of not being able to get the deals they paid for.

 

In the typical "group buying" online model -- which has recently exploded in popularity worldwide -- shoppers pay the websites in full before redeeming their coupon vouchers in order to receive huge discounts from 50-95 percent off at restaurants, spas, clothing stores and other things to do in their city.

Most of the sites typically use a 50/50 revenue split, taking half of the income from retailers, while keeping the rest for themselves. "This has led to one of the industry's biggest problems, actually hurting the retailers these sites are designed to help," said Mitch Sibonney, partner of Everybodybuys which aims to tilt the financial balance back toward retailers in Canada and the United States.

The Toronto Star last week featured the new website as an innovator in the online discount space that is "hoping to spread the kindness to retailers."

Instead of taking a percentage of the coupon's value, Everybodybuys charges shoppers a small fee (usually around $3) for the deal. Customers can then present the coupon that entitles them to a discount. The retailer collects 100 percent of the revenue - rather than 50 percent - upon redemption, instead of waiting to be paid 90 days or more by the Groupon-like companies.

Sibonney says the businesses involved in the typical arrangement most often work at a loss. "It's just not sustainable in a lot of cases to be giving up that much money, which is why we created the 'Buy Here, Save There' program" said Sibonney, who is also a co-founder of the internationally renowned 1 Litre Water Company an Oprah Winfrey favourite.

Many retailers have claimed they were misled. One study found that a third of industry-led Groupon merchants lost money (with restaurants faring the worst) and 40 percent said they wouldn't do it again; even people who made money had staff problems due to too much volume and poor tippers.

About EverybodyBuys

The Company was founded in 2010, as a daily deal website for people to experience their city at discount prices. The "Buy Here, Save There" program has been tested in Toronto and successfully launched across Canada and the United States.

www.everybodybuys.com

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