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3.4 24 Reviews

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Our verdict: While GroopDealz has an above-average resolution rate, there’s room for improvement. Investigate common issues reported by customers and understand how they were resolved. Be prepared to follow up on your queries if needed, and keep detailed records of all interactions.
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GroopDealz Bad for business?

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Why Groupon and Living Social Are Doomed
Nov 30, 2012 8:38 AM EST
Living Social let go of 10 percent of its workforce and Groupon’s CEO narrowly avoided the ax. Have we reached the twilight of the daily-deal business?
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The U.S. economy is growing, ever fitfully and disappointingly. That’s good for business, unless your business happens to be one of the latest tech fads: the daily deal. The travails of the largest and most prominent daily-deal purveyor, the Chicago-based Groupon, are well known: its declining stock price, a history of questionable accounting, and a founder/CEO whose tenure is in question. But Groupon is buffeted by a problem that it and its competitors all face: the daily-deal business just isn’t that great.

Although there are hundreds of companies offering online group-bought deals, the two most prominent are Living Social and Groupon. Living Social, based in D.C., confirmed Thursday that it would be lay off 400 employees, or 10 percent of its total workforce. The “good news” for Groupon this week was that its stock jumped after CEO Andrew Mason said at a conference that “If I ever thought I wasn't the right guy for the job, I'd be the first person to fire myself." Groupon’s board Thursday confirmed that Mason would be staying on as CEO. Groupon, which was declared by Forbes in August of 2010 to be “the fastest-growing company ever, ” now trades at about $4.50—less than a quarter of its $20 IPO price.

Living Social is privately held. But a look at Groupon’s financials gives us insight into just what these companies are up against. Groupon is a tale of three numbers that, when presented in sequence, decline in large magnitude. The first is its gross billings, the revenue it reaps from sales before it pays out refunds to the merchant or taxes, which came in at $1.2 billion in the third quarter. The second is revenue, about three quarters of which comes from the group sales and a quarter of which comes from goods the company sells directly. That was $569 million in the third quarter. The third number is the company’s net loss: about $3 million for the third quarter.

In the beginning of 2011, Groupon’s gross billings of $668 million were growing by over 1, 400 percent year over year; but in the third quarter of 2012, the $1.2 billion in billings today represented a mere 5 percent annual increase. In that same time period, the number of customers who had purchased a Groupon in the previous year rose from 15.4 million to just under 40 million. But the gross billing per customer had fallen by just under 12 percent, from $169 to $149. The year-on-year growth rate of the company’s quarterly revenues has slumped from 1, 358 percent in early to 2011 to 33 percent in the third quarter.

Andrew Mason, founder and CEO of Groupon, attends his company's IPO at Nasdaq on Nov. 4, 2011, in New York. (Mark Lennihan / Getty Images)

RELATED STORIES
Trouble in Coupon Land
‘Nothing irritates people more than finding that they’re paying a premium over what other people are paying.’
What’s more, it is costing Groupon more in marketing and sales (you need salespeople on the ground to get merchants to participate in deals) to get fewer dollars from each customer. The company’s workforce has been shrinking too. Groupon let 954 workers go in the third quarter and laid off 80 more earlier this month when it announced its earnings. Groupon has just above 11, 000 employees).

Living Social’s financials are more opaque, but because Amazon put $175 million into the company in December 2010, we are able to glean some data. Amazon disclosed that Living Social lost $566 million in the third quarter, although most of those losses were chalked up to accounting items.

Both companies are likely suffering from a few fundamental problems. David Reibstein, a marketing professor at the Wharton School at University of Pennsylvania, was an early daily-deal skeptic. In May 2011 he argued that the business would eventually suffer because merchants would realize that the coupons aren’t a great deal for them. Reibstein argued that Groupon’s customers were likely “price-sensitive, ” meaning they search for the best deal they can find. This means that they are not likely to turn into repeat customers. So the merchants offer a deal, sometimes at a loss, but then get little future business.

This effect has been confirmed empirically by a team of marketing researchers who tracked three businesses for a year after they offered a social coupon. All three companies lost money the month they offered the coupon and will have difficulty earning it back. According to analysis done by the two researchers,
V. Kumar and Bharath Rajan, the companies would need 15, 18, and 98 months (almost eight years) to earn back their lost profits. The reason? “The three businesses had difficulty retaining most of the new customers who were attracted to the coupon offers, ” the two researchers wrote in the MIT Sloan Management Review.
View of the reception desk at Living Social in Washington on June 26, 2012. (Nicholas Kamm, AFP / Getty Images)

To compound this problem, merchants can alienate their existing customers by offering coupons. Take the oft-offered massage or spa treatment. Longstanding customers might feel alienated, insulted, or ripped off if a massage they pay $100 regularly is offered for only $50 to a newcomer. Reibstein told The Daily Beast that “nothing irritates people more than finding that they’re paying a premium over what other people are paying.” Even those customers who were perfectly willing to pay the full $100 price for a massage could get a Groupon instead, making the spa take a loss on a customer who was willing to pay full freight. “The last group you want to offer coupons to are your existing customers“ Reibstein says.

Furthermore, Reibstein speculated that Groupon and its ilk would only do well in a weak economy, “The Groupon business model works better during a recession than it does during a vibrant economy, ” he said in an interview last year. Although the economy wasn’t technically in recession then, his argument still applies: when a business has extra inventory—say, a beauty salon with unfilled appointments—it will be more willing to discount heavily. But when there’s more demand, higher-quality businesses won’t see the need to offer discounts. As a result, the daily-deal companies will have less compelling offers for their customers.

Reibstein flatly predicted, six months after Google offered $6 billion for Groupon and five months before its IPO, that “there's going to be a lot of money lost in some of these investments”. Today, Groupon’s market capitalization is just under $3 billion. Maybe you’ll get an email soon to get some of its stock at a discount. The company’s shareholders might just prefer a massage.

Like The Daily Beast on Facebook and follow us on Twitter for updates all day long.

Matthew Zeitlin is a reporter at Newsweek Daily Beast

For inquiries, please contact The Daily Beast at [protected]@thedailybeast.com.

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lawsuitsettledutah
, US
May 16, 2013 2:10 pm EDT

Harrison Mitchell and his company Groopville, Inc. and Joshua Lindsey and his company Capital Business Solutions have been involved in a legal dispute. That dispute has now been resolved on mutually agreeable terms.

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GroopDealz Groopdealz bad for businesses

By Daniel Kehrer
Founder, BizBest.com

Unsatisfied business owners are starting to abandon daily deal sites such as Groupon, LivingSocial, Travelzoo and BuyWithMe and may not return in sufficient numbers to sustain such sites in the future. That’s one key take-away from the most exhaustive study yet done on the daily deals phenomenon.

The study by Rice University business school professor Utpal Dholakia analyzed the performance of daily deals offered through five major sites in 23 U.S. markets. It examined the results local businesses achieved on the deals they offered over an 18-month period.

Overall, the picture isn’t pretty. Most small businesses that have been making discount offers on Groupon, LivingSocial and other sites either don’t track the actual financial results of their offer, or have a distorted view of what’s really happening. Several Rice University studies show that most offers are not producing great results.

As small business owners look closer at how deep discount deals offered online are affecting profits, two things may happen:

The daily deal websites will have trouble attracting enough local businesses to fill their deal pipeline; and
Business owners will be able to demand a higher revenue share, lower fees and more services.
Some of the study’s findings seem rather positive. While 27% of businesses said they lost money, and 18% broke even, 55% said they made money. About 80% of deal buyers are new customers (a good thing); and a stunning 1-in-5 consumers who buy a deal never redeem the voucher they’ve already paid for. While this may be the primary way many businesses are turning a profit on their offers, it’s not much of a business model.

Crafting a discount deal that actually benefits your business long term is tricky. Most small businesses don’t get it right. And the Rice University study uncovered a number of troubling red flags that point to structural weaknesses in the daily deals business model in general. For example, two big things that local businesses bank on when deciding to post a deal are these:

That deal buyers will spend at least a little money beyond the deal value itself; and,
That many of the deal-buying customers will return at some point for a full price purchase.
But things aren’t quite working out that way on either count. According to the research, just one buyer out of every three spends anything beyond the basic discount deal price. Even worse, less than 1-in-5 (19.9%) return later to make a full-price purchase.

Salons, spas, bars and restaurants – the bread-and-butter businesses for Groupon – seem particularly disillusioned with offering online daily deals. Only 35.9 percent of bar and restaurant owners said they’d do it again, while 41.5% of salon owners would run another such promotion in the future.

If you do plan to proceed with a daily deal offer, are some things to consider:

Try offering a daily deal of relatively high face value (say, $50 or more) with a shallow discount (at most 25% off face value), a short redemption period (90 days or less), and a limit on the number of deal vouchers consumers can buy.
Among industries, health care, professional services and special events have been most successful; more than 70% made money. However, two of the largest industries – restaurants/bars and salons/spas – don’t perform as well. Only 43.6% of restaurants surveyed earned a profit from the promotion, while 53.7% of salons and spas made money.
Most importantly, don't cut your other advertising and marketing spending to do daily deals. "Many local businesses that are spending their marketing dollars on daily deal sites have dramatically cut their ad budgets, " Dholakia says. "This is a problem because they're not building their brand when they discount their products and services. Only about 20% of customers using daily deals return to buy at full price, but customers acquired through other programs typically have much higher rates of full-price repurchases."
Copyright © [protected] BizBest® Media Corp. All Rights Reserved.

Daniel Kehrer is Founder & Editor of BizBest (www.bizbest.com), a free and independent information service for small business. Twitter: @BizBest © 2011 BizBest Media®

Read full review of GroopDealz and 2 comments
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lawsuitsettledutah
, US
May 16, 2013 2:09 pm EDT

Harrison Mitchell and his company Groopville, Inc. and Joshua Lindsey and his company Capital Business Solutions have been involved in a legal dispute. That dispute has now been resolved on mutually agreeable terms.

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CDEAnglo
, US
Jan 18, 2013 12:07 pm EST

I dont know much about groopdealz as i use another site to sell my goods. My husband is an attorney and before i do business with any company he checks them out. Groopdealz is being sued by one of their vendors in Salt Lake City Utah for $150, 000 for breach of contract. Harrison Mitchell is also personally being sued for this amount, and all of the assets, inventory, and accounts receivable have a UCC Lien on them. What does this mean? It means if this vendor wins the lawsuit, your inventory, cash that Groopdealz is holding, and your business could be exposed and at risk!
My husband strongly advised me to stay away from this company as they are caught up in this lawsuit and that my business could be potentially liable because they collect the money and represent our products.

This post is simply to warn others and this lawsuit can be verified in the utah court system or you can call Groopdealz and ask them. By law they are required to disclose this info to a vendor if asked as it is public information.

We use VeryJane.com / The owner is honest and i get great results.

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GroopDealz Harrison Mitchell Utah Scam Artist

Harrison Mitchell is a local here in Utah who scam both businesses and customers out of thousands of dollars. It is a known fact that he runs an online Scam called Groopdealz.com. He makes businesses put there products online and waits for them to be successful with a cap, once he knows they will succeed he goes direct to the manufacturer and cuts the business out.
He has also been know not to pay his businesses even when they do sell on his website, he makes up all sorts of excuses that he s broke, they had refunds or he's Fishing and he will get to it soon.
Harrison Mitchell is one of the worst Local Scam artists we have seen in years.
If this guy doesn't smoke and a deal weed then I'm Walter Cronkite!

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CDEAnglo
, US
Jan 18, 2013 12:12 pm EST

HARRISON MITCHELL IS ALREADY UNDER INVESTIGATION FOR FRAUD WITH THIS OFFICE BELOW. CONTACT THEM AND GET YOUR MONEY BACK TODAY!

consumerprotection@utah.gov | 160 East 300 South Salt Lake City, Utah 84111 | Phone: [protected] | Toll-Free: [protected]-SAFE | Fax: [protected]

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ANON13
, US
Jan 11, 2013 5:04 pm EST

Anyone ever been paid through this site? I am curious because I still have not receive payment! :(

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premierblows
, US
Nov 20, 2012 8:33 am EST

Groopdelaz Sucks, they are constantly stealing vendors products!

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carlydeerden
, US
Oct 29, 2012 3:10 pm EDT

Gropdeals is a complete China rip off. they seriously sell and promote such cheap crap i wouldn't be surprised if they are running a Chinese sweat shop in their back office. I purchased a dozen bubble necklaces for myself and friends and they all fell apart with in 7 days. Groopdeals refused to refund the money and said that we must have been wrestling in them, nice customer service...NOT! Their stuff is cheep crap dont buy it!

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TaraB12
, US
Oct 13, 2012 4:51 pm EDT

I hate this guy...Go to www.Veryjane.com instead

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GroopDealz Lawsuit / $150,000 lien on assets

I found this link online about a lawsuit filed against groopdealz.com & its owner Harrison Mitchell. It reads that groopdealz didnt pay one of there vendors for some products or services. I know that groopdealz uses its vendors to proove products will sell and then they find a manufacturer and cut you out. Basically making you take the risk before they do. I just feel bad if they are no starting to not pay there vendors, we barely made anything on our deal. Here is the link i found on a Etsy blog, hopefully it can help other vendors not get taken.
http://www.free-press-release.com/news-groopdealz-being-sued-assets-and-accounts-have-150-000-lien-1347992557.html

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LillyAmanda
, US
Oct 02, 2016 3:50 am EDT
Verified customer This comment was posted by a verified customer. Learn more

I'm a customer on Groopdealz.com and the mirror site, Eleventhavenue.com.
You know why? Because I read these complaints, checked out the owner, checked out the site, and found things I loved, bought them, went back for more.
I still had fears about Harrison Mitchell's motives and whether or not I would order something or multiples of things and not get them from an angry vendor.
Then, someone at Groopdealz made a really BIG mistake in releasing confidential info about me in a memo program to me, when it was supposed to be confidential. Here's the kicker- THEY MADE IT RIGHT. I was not mad, just hurt. Harrison Mitchell called me, talked to me about what I liked and didn't like about Groopdealz, and what I wanted to see more of. I had some ideas about attracting new customers, since I obviously do not know about the vendor side of things.

He listened to me, and I think he cared a great deal what a customer who buys almost daily from the site thinks and would like to see.
I am a mature person, in my 50's, in fact, so I am no " babe in the woods", having an advanced degree in nursing and psychology.
I listened to Harrison, and he didn't deny ANYTHING I asked him about the company. He didn't make any NEGATIVE COMMENTS about vendors, past problems, or any issues.

He is either a person with an advanced degree that includes education in public relations, OR he was being completely honest, OR both.
I trust him and I believe in him and over the Labor Day holiday weekend sale, I bought over $1000 worth of clothing from Groopdealz. AND I had read every comment posted here and elsewhere. And read his interview in Forbes magazine, which, I'm sorry, but carries more gravitas with me than people complaining without showing proof of their complaints on an anonymous board.

I am not a shill for Groopdealz or Harrison Mitchell or the lovely Jenna Klumker, whose message helped me talk to her on the phone with some questions that I had during the summer regarding all this airing of grievances.
I WANT Groopdealz to succeed, and I love one brand in particular- Lucy and Lyla. Their merchandise was MADE for my style.

A lot of you ( 2016) are throwing direct from Ali Baba crap up on Groopdealz in order to make quick money off people who don't have the acumen to go to the site and memorize the products in the women's wear sections like I do. I will NEVER get caught paying $35.99 for a Chinese import worth maybe $7.00 and $3 of that is shipping fees to my residence.
SO for that reason, I place some responsibility and some blame on the sellers who are using what's supposed to be a "community' marketplace to sell the cheapest of the cheap to the trusting and innocent customers.

I'd like to know WHY Groopdealz is having to deal with the huge AliBaba.com trash merchandise influx from vendors they likely trust.
The management of Groopdealz has a very nice website which is extremely accurate and as far as I can tell as a consumer, has some very nice Etsy type boutiques in areas I don't buy in, such as baby clothing, monogrammed items, and home goods.

If I provided you a selling venue and you put up the trash sold on AliBaba, com wholesale from China direct to you, drop shippers, I don't know how fast I'd pay you, either. I am angry as a consumer that this type of merchandise is marked up so high and sold with YOUR names on it, VENDORS.

I stand beside Harrison as a loyal customer who has been treated extremely well, and who will tell others about Groopdealz until I have no voice left, and a believer in Jenna's ability to help customer and maybe vendor. All I care about is being able to get the casual pretty clothing I want at good prices, knowing it's made well and is not the same items I can buy on Wish.com for $5.00 plus $2 shipping per item, and see it thrown up on Groopdealz by a couple of vendors specifically who charge $25-$35 for the identical item, NOT EVEN CHANGING THE PHOTO!

I like the Groopdealz team a lot more than I do those of you who are trying to tear down what Groopdealz is, and the principles I know Mr. Mitchell and his employees hold dear. I stand with Groopdealz.

Loyal Customer in DFW. Texas

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why en
, US
Jul 20, 2016 12:35 pm EDT
Verified customer This comment was posted by a verified customer. Learn more

Hi fellow frustrated vendors! I am in the process of filing a complaint through Consumer Protection against Groopdealz. Here's the link to the complaint form: http://dcp.utah.gov/complaints/manual.html. Let's get our money back! Click on the 'cosumer complaint form' on the top left. Good luck to us.

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why en
, US
Jul 15, 2016 11:02 pm EDT
Verified customer This comment was posted by a verified customer. Learn more

I have my lawyer friend look into this. They in 'breach' of our contract! They are supposed to pay us per payment schedule but are months behind! I am tired of begging for MY money. Will post soon depending on what my friend says.

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Teresa Miller Miles
, US
Jul 12, 2016 6:55 am EDT

I have sold w them for two years now they refuse to respond to my emails after I ship the f-in product I am pissed as hell owed 800$+
Class action lawsuit y'all?!

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sashagirl
, US
Jun 07, 2016 5:35 am EDT
Verified customer This comment was posted by a verified customer. Learn more

I am still waiting to be paid for a small deal in March.
VENDORS and BUYERS beware! They are not paying vendors and vendors may not ship merchandise in future deals if they are not being paid!

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sashagirl
, US
Jun 07, 2016 5:34 am EDT
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I am still waiting to be paid for a small deal in March! Vendors be aware! Also, most of the new merchandise from vendors they have on their site now is cheapo imports!

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owlboutique
, US
May 18, 2016 9:47 pm EDT

I have sold with Groopdealz on and off over the span of the last few years. They were super crappy and slow to pay me at first so I just used other sites. Once the lawsuit was taken care of I had heard they had cleaned up their act a bit and decided to give them a try again. I have multiple deals that are 2-3 months past due for a total of nearly $3000. I am about to blow a gasket. I will never deal with this bull again! They are untrustworthy, unprofessional, inept excuse for a business. DO NOT do business with them, The headache is more than its worth. Plus they take more comissions than any other site. The health of my business is now in jeopardy because of these clowns. I will shout it on the rooftops to try to prevent others from having to deal with this.

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Crummy Girl
Canby, US
Apr 14, 2016 9:57 am EDT
Verified customer This comment was posted by a verified customer. Learn more

I have been waiting on payments as well :( As a stay at home mom and small business owner it is unfair how they are treating their vendors.I am tired of asking when I will be paid. I think I might not run anymore deals with them. I have better success with PS I adore you and Sassy Steals. I have $2500 in sales with Groopdealz and only have been paid about $600 in the last 30 days

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smallbusinessowner2016
, US
Feb 04, 2016 3:16 pm EST

I completely agree and have experienced long, excessive wait times for payments from groopdealz. I have some payments that take up to 3 months to receive full payment. I also recently discovered that when a customer returns an item (for any reason, ie customer changes mind, orders wrong size) Groopdealz refunds 100% of their original payment, including shipping fees. So as a seller you eat the costs of shipping the product to the customer when they decide to return it. Groopdealz ALSO does not refund the fees they charged you on any items returned by customers. They keep their portion of a sale that has been returned/cancelled. Not sure if this is even legal. How can they keep $ from a sale of a item that was returned?

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Fashion Boutique
re, US
Jul 22, 2015 11:30 am EDT

Hello, I am a vendor on Groopdealz/11th Ave. Their policy states 75% payment 10 days after tracking info uploaded and then final 25% payment 30 days after. I have some up to 60 days and I haven't been paid the FIRST 75% installment. They owe me just under $1500 for several deals.

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