How Groupon Royally Screws European Businesses

In the oddly satisfying slow-motion backlash against Groupon, one of the chief objections from business owners is that Groupon takes a hefty cut of the proceeds for doing nothing but selling the coupons, leaving the businesses themselves with all the work and all the risk.

Well, that's nothing. In America, a typical Groupon deal would be this: your business sells, for example, 300 coupons at $50 each, for a total of $15,000; Groupon takes a 30% cut, $4,500, and the business gets the rest of the money. If any customers fail to redeem their coupons, well, too bad for them.

But in Europe, the WSJ reports, the deal for businesses is even worse—because Groupon keeps 100% of the money from any coupons that don't get redeemed. In other words, if you buy that $50 coupon to Store X and forget to use it, Store X doesn't see a penny of that money; Groupon gets all of it. That can translate to thousands of dollars on a single deal, all into Groupon's pocket. The company blames the different practices on "historic legacy" and says "the [coupon] model evolved differently in Europe."

Sure, sure. And I evolved a model in which I just walk into your store and shoplift what I want and pay nothing. No complaints, business owners; it's a historic legacy.

[WSJ; photo via AP]