Groupon made a pretty big slip-up in their fourth quarter earnings report, forcing them to issue a restatement admitting they lost $22.2 million more than originally estimated. What caused such a significant loss – totaling $64.9 million — that they didn’t account for? Customer distress, which basically means: refunds.
It seems Groupon, the confident leader in the daily deal market, didn’t expect to have so many unhappy customers. As the rapidly-growing company started dealing with higher-value services, they began allowing refunds. Consequently, refunds surged. But Groupon accountants didn’t consider this possibility. Consumers who were initially dazzled by the expanse of group buying options and daily deals now face an over-saturated industry full of deals they either can’t use or don’t care about.