Coupons or “groupons” as the company calls their group coupons are as good as gold and this can sometimes create an environment for abuse. Most businesses will print out a list of peoplewho purchase coupons and will then cross off the corresponding serial numbers as the grouponsare redeemed. While this may work, it is also time consuming for merchants and leaves themopen to fraud.
President of Cole Hardware in San Francisco, Rick Karp, admits that it’s fairly cumbersome for the store to keep track of the serial numbers. In July the store sold more than 3,800 coupons for 50 percent off on merchandise.
According to Groupon’s Vice President Mihir Shah, the company will soon be releasing amobile-phone application to help businesses track their groupons. Shah explained that the mobileapp, which runs on the Apple iPhone and uses Google’s Android software, will let merchantsscan serial numbers on Groupon customer receipts. Some stores began testing the app last week.
“When you as a merchant try to grow your revenue by opening yourself up to new methodsof electronic commerce — Groupon or whatever — you expose yourself to greater fraud risk,”said James Van Dyke, president of Javelin Strategy & Research in Pleasanton, California. “Is itdangerous? Yes. It’s also dangerous not to be involved. The merchants who don’t get involved inthis don’t grow and get left in the cold.”
“We’re keenly interested in ways to make redemptions easier for both customers andmerchants,” Groupon Chief Executive Officer Andrew Mason said in an interview. “What we’retrying to do is give them something that’s super-fast and easy to use.”
Groupon, the Chicago based company that began in 2008, offers deals in more than 230 citiesacross 29 countries. Currently they are the leaders in a flurry of similar companies bringingconsumers daily deals from local merchants. Groupon was valued at over $1 billion after raising $135 million from the Russian investment firm Digital Sky Technologies.