To Buy or Not to Buy: Discounting Groupon’s Apology

  • Third-party sellers use racial epithet for product color description
  • Groupon’s stock is down more than 45% in the last five years

Listings for women’s boots on Groupon’s (GRPN +0.24%) website seemed innocuous, until customers saw the color option “n***** brown available.” The offensive description and racial epithet was used by more than one of Groupon’s third-party sellers. Are these oversights by the company just another reason its stock price continues to decline?

Why This Matters: Groupon is selling its apology to anyone who will listen. The company featured two third-party sellers, Kojwa and Margines that described their boots’ color options as “n***** brown.” These items were sold on Groupon’s site via its self-service platform. “Language like this has no place on Groupon, and we’re further strengthening our self-service controls to ensure it doesn’t happen again,” Groupon said in a statement.

The coupon deal site is in need of a turnaround not just with their service controls but strategy as well. Groupon has been trying to reduce dependence on products deals and is shifting focus toward the high margin local services market. Shares of the company are down more than 45% in the past five years. However, since the beginning of the year Goldman Sachs and Morgan Stanley have both raised their stock ratings to ‘Neutral” for Groupon.

What’s Next: Groupon reports its second quarter earnings in early May. Be on the lookout to see if the #ShutdownGroupon movement will have an impact on the company’s overall sales.

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