Wednesday, January 19, 2011

Groupon CEO Insults Japan With Simple Minded Apology

Groupon, you've stepped over the line again.

Over the New Year's holidays, Groupon Japan sold traditional New Year's dishes to the Japanese. It didn't go well. In fact it went so badly that dozens upon dozens of people complained about fraud and then the Japanese government actually stepped in and is currently investigating the situation. So, I guess I should say it was a disaster. 

This has been very damaging to Groupon's reputation in this country. I think the Japanese are not forgiving when it come to this sort of fraud - especially when it deals with food. Now Groupon is making it worse by adding insult to injury.

Probably the Groupon people are unaware of the scandals with poisoned gyoza and other food imported from China. That episode set back Chinese food businesses exports to Japan at least 10 years.

Now the Chinese food companies have to start over.

This is a photo of the New Year's dish that Groupon advertised
This is a photo of what was delivered taken by 
a furious ex-Groupon customer.
Then the CEO of Groupon has the audacity to make excuses and say,
"We we're too busy to fill the orders" 
No. This looks like blatant fraud.

What happened with Groupon for the traditional New Year's dishes is that Groupon advertised gorgeous dishes for a really low price. But, as is often the problem with catalogue or online ordering, the product doesn't look anything like the the advertisement. So people were furious. 

In fact, it looked like obvious fraud. 

This sort of bait and switch is bad enough, but when you deal with people's food, then you are dealing in an area that could conceivably destroy your business. Now Groupon is doing a lame attempt at damage control. Way too little, too late and completely lacking in respect and understanding of Japan and Japanese people.

As Wall Street Journal reports:

Doing business in Japan can be a, well, tricky business. Just ask Andrew Mason, CEO of exponentially expanding online discount specialist Groupon, who ended up posting a personal apology video to customers here on YouTube after a flub in orders for Japan's prized traditional new year's meal. Certainly, Groupon Japan appears to be learning to offer local deals that have specific local appeal. One of the more exotic deals on offer is a chance to take in a "new-half," or drag, show in Tokyo's central Roppongi district, currently going for 56% below the 20,000 yen going rate. About 240 Grouponees have purchased the ticket for 8,800 yen.

I spoke to an online promoter and marketeer here in Tokyo yesterday named Will Thompson and he told me that Groupon is not doing that well in Japan and that the Groupon hype is just that; hype. Judging from what I have seen and the chatter on the Japanese language Blogosphere, I am beginning to agree.

Here is the CEO of Groupon making the horrid mistake that all foreign management makes in Japan: Not immediately apologizing repeatedly and following that up by making excuses. He doesn't seem to understand the gravity of this situation. 

Sorry, pal. No one wants to hear your lame and dumb excuses. This is a royal FAIL!

Mr. Mason, you are not making an excuse to your share-holders. You are not trying to sell us on how great your company is; you are supposedly apologizing to Japanese families whose New Year's celebration 2011 you ruined... You know what? New Year's 2011 only comes once in a life time. Even someone obviously as out-of-touch as you are should be able to understand that. 

This guy is clueless about Japan. A good apology would have gone like this; "I am very sorry that this happened. It is all my fault. This will never happen again." Then bow your head and shut up. Then send some real apology's to customer's and coupons for, say, ¥50,000 ~ ¥100,000 to each customer - and not blab that to the media because, if you did make your efforts public, you'd look even more insincere than you already do. 

The problem was not only late deliveries and damaged product, the biggest complaint was people getting a product that doesn't look anything like advertised. But he goes on to make lame excuses and not telling the whole truth. The best one is when he says, "We are very sorry. We apologized many times. We sent ¥5,000 ( about $60 USD) gift certificates and will make sure this doesn't happen again."

¥5,000 yen certificates!? Wow! Classy, Groupon! Classy! If you ruin my New Year's holiday next year, can I get ¥10,000? ($120 USD).... Are you kidding me? A stinkin' ¥5,000 yen for wrecking my New Year's feast? Can you also kick or slap me when I accept your crummy  coupons? 

¥5,000? That's an insult!

Kevin Bacon from Animal House after buying stuff from Groupon: 
"Thank you sir. May I have another?"

He says, "We will make sure that this never happens again" and a few seconds later, he says,  "Things like this have happened before." Is this guy for real?

From reading the article on Wall Street Journal and the bizarre example of selling a mere 240 tickets to a show that caters to transsexual and transvestite fans, I have to wonder about the viability and common sense of the management of Groupon. I mean, get serious. 240 tickets to a drag show? After a scandal with people accusing you of defrauding the public in a food related incident?  

Sorry, Groupon, traditional New Year's dishes are like Turkey on Thanksgiving to Americans... You don't screw these things up. Service is what Japan is famous for. Your service is a joke.... You make excuses that "We couldn't fill the orders"? Oh really? So you couldn't fill the orders so you thought it was OK to "send something" anyway? What a crap excuse for lousy business.

If I ordered a roasted thanksgiving turkey for Christmas, but the restaurant couldn't handle my order, you think it's OK for them to send me Kentucky Fried Chicken instead? Preposterous.

Then you actually have the gaul and foolishness to brag to Wall Street Journal about selling a lousy 240 tickets for a show full of drag queens? Pardon my French, but how foolish can you get? 

In spite of the nonsense you've read about Japan, transvestites and drag queens are not main street interests and concerns. You know, most Japanese have families and regular jobs to think about... You know, Main Street concerns... Funny that. 

My personal opinion is that Groupon has already crossed the line into the forbidden zone here in Japan by allowing this fraud to happen with people's food. Now they top it off with this idiocy about an alternative lifestyle show in Tokyo? And this piss poor excuse video? 

Either the CEO of Groupon needs to fire his advisor on Japan or he needs to have his head examined. He certainly needs to learn some humility. If you do not understand Japanese culture and common business practices and norms in Japan, you shouldn't be doing business here.  

Compare the difference in quality between a company like Groupon and Apple. How would Apple have handled complaints like this? With lame excuses that obviously fail to understand or address Japanese cultural concerns or with a solution that would make people say "Wow"?

If you keep up this nonsense, Groupon, you soon won't be doing business in this country. The Japanese language Blogosphere is ablaze with comments against this company and it's shoddy business already. Once this video gets around, they'll be jumping on you for that.

You blow the New Year's dishes. Make an apology video that has a blatant lie in it; "delivered late and damaged!?" How about "....delivering a product that was nothing like what was advertised?" 

On top of this, the video seems terribly insincere... What's the word for it? Pompous? Yeah. That's getting close.

Groupon has lost tens of thousands, if not hundreds of thousands (more?) Japanese customers with this. This story was and still is all over the country. Everyone knows this. Everyone is either disgusted with groupon or laughing at your incompetence. I, for one, will never order from Groupon. 

Groupon needs to get their act together really quick. There are thousands of bloggers just like me (many in Japanese language) who are just waiting for you to blow it again. 

Judging by how you've handled this mess, I'm sure you won't make us wait too long.

Read Part Two of How This Affair Should Have Been Handled by Groupon. A Lesson for all Western Businessmen Thinking of Doing Business in Japan.

UPDATE: I also noticed that what the CEO says in English is not the same as what is written in Japanese subtitles. Here's a detailed explanation.

Note: Thanks to News on Japan for some links. No thanks to News on Japan for not taking this fool CEO and his company to task for fraud and unscrupulous business practices... I know why News On Japan doesn't take a stand, though.... They have few advertisers so they need Groupon.... Duty to readers takes a back seat to getting money from sponsors, regardless of how shady those sponsors dealings are. 

Think about this NOJ; Maybe you have no advertisers because you lose credibility with readers for a poor job. This is twice in 5 days that I have taken you to task for not doing your job.


Andy "In Japan" said...

Look at that food plate. It's so revolting in terms of both presentation and food quality that you almost have to laugh. 5,000 Yen refund is an insult.

Anonymous said...

My husband ordered "famous brand" shoes on Groupon and, after wearing for three days, the bottom right sole fell off. When we complained, the company said they couldn't give us a refund because the product was used.

The big "wadai" now reminds me of the wadai Amway had in Japan in the early 1980's... Groupon can't keep this up. I have other friends who will never use Groupon again. We certainly won't and tell all our friends what happened.

Julie Yamamoto

Anonymous said...

Does Groupon sell Grey Poupon?

Anonymous said...

"You know what? New Year's 2011 only comes once in a life time. "

If you believe this, you really need to study the condition of man throughout history. Bad food on New Years is hardly a tragedy. These people will recover from their disappointment.

Anonymous said...

Did you say New Years Eve dinner?

Dear God.

Only one apology necessary: seppuku, and fast.

Jamie said...

Groupon was right to apologize, but the business offering the deal was responsible as well for the failure.
It is quite frequent for stores and businesses in general not to be ready for the huge amount of new customers they get after the offer a deal.
I found this great tips for businesses to be ready when offering a deal on deal sites, check it out.

mikeintokyorogers said...

Regular reader Chang chimes in:

The person who wrote:

"You know what? New Year's 2011 only comes once in a life time. "
If you believe this, you really need to study the condition of man throughout history. Bad food on New Years is hardly a tragedy. These people will recover from their disappointment.

Obviously knows nothing about the religious significance of Japan, Shintoism and New Year's. New Year's in Japan is not just a drunken bash like westerners have. New Year's in Japan is a significant religious ceremony in a country that is over 2,700 years old.

Typical comment from westerner through the lens of a person with cultural superiority complex.


Hushashi said...


Getting something of high quality at below market rate is patently *not* what Japan is known for -- at least domestically. (Excepting the hundred yen shops, of course)

Part of the blame for this mess, in consequence, lies with the saavy "customers" who somehow thought they could get an incredibly good deal on something that reputable and well-known establishments start taking orders for weeks in advance and usually charge twenty or thirty thousand yen for.

Also lost in the buzz -- who put these dishes together? Some Bangaledeshi or Pakistani bus boys in a back room somewhere? What manager was supervising such ridiculous products? They weren't all Groupon people -- there were plenty of Japanese in the chain of culpability... let's assign blame appropriately, and let's not exaggerate the issues at play. Most Japanese aren't going to be "mad" at Groupon, they're going to say "shoganai", shrug, and say "that's what you get for trusting an unknown to deliver something unlikely for an unrealistic price."

ht02135 said...

that Groupon ceo need to be slapped for insulting Japanese and Japanese people's position regarding to food. 5000yen gift is another ultimate insult. is that idiotic ceo doing a sincere apology to Japanese people or try to infuriate them XD ? now even if ceo were to demonstrate harakiri is too late XD .

Ira Hata said...

Good opportunity for some enterprising young Japanese to provide a better service that actually works. Who knows, maybe they'll out do Groupon at their own game in the US. Look at Toyota and Lexus. Before them, American cars were supposed to be the "standard" in the US...


Anonymous said...

How can businesses survive doing Groupon anyway? I mean, things are bad enough as it is. I could never support my business with 90% discounts... If I were selling beer for ¥50, then I certainly do not need to pay Groupon any money to pack my shop full of people.

Jimbo said...

Thanks for the heads up, Mike. As usual, you're a well spring of useful information. I've got friends who rave about Groupon, but now I see that it's not the kind of company which I want to give any of my business. Bad customer service is one thing (most Western companies have it) but this guy is just insulting his customer base. He would have been better off just saying nothing at all.

Marc Abela said...

Just posting rapidly to balance a bit some of the viewpoints I found on this page.
Go Andrew Mason.
Governments and public activities are mobilizing so much of the available resources (human, etc) and idle wealth today, while rebuilding everything and nothing ranging from nowhere-land-highways to useless-airports-in-every-prefectures just to keep its population "busy" (ref: New Deal?), that it has become difficult (literally impossible?) for the private sector to really provide customers with any serious level of high quality service. We are moving towards a global pre-Mao/Stalin phase (world wide) and resources and capital are getting scarcer and scarcer while central planning regulations are getting higher and higher - this in the near future will slowly and gradually reflect (already slowly starts to reflect?) on the quality of the bread and taste of the rice we all eat, on whether average families can afford green cars or not, how cute girls shoes get, how often the population gets to travel, how elegant man suits are, how patiently people behave while on the streets.
Like Bastiat said so softly some 200 years ago, in a time when he and his fellow friends were navigating through Napoleonic wars:
"When goods cross borders, armies don't".
Go Andrew Mason. Wishing you all the efforts & courage to never give up and to come back strong (/stronger). Japanese customers are tough (very though) - and that's exactly how we want them to be. All the best.

Anonymous said...

The Boycott Groupon Movement is Afoot! Groupoff!

Marc Abela said...

Dear Anonymous,
Well, I feel once again compelled to add in a few lines on this page.
Ok. Let me see if I get this straight. On one hand we have a huge destructive and coercive monopoly called the government with budgets of somewhere north of 25 trillion dollars in world-wide aggregate, killing people, lying to grand-parents, stealing from the next generation, bombing innocent cities, dropping kids overseas just to renew the military industrial complex's annual budget, while also at the same time preventing private companies and free individuals from working for a living, from hiring, eating, from simply behaving freely - and on the other hand you have companies, free people trying to find ways to feed themselves, attract voluntary customers, improve visibility, make an easier living for all, some make mistakes, some slip, most take risks, some have talent, some less, some screw up, some work out well... and you take your boot and find nothing better than to just step deep on the throat of this one Groupon guy... you puzzle me. Can you deliver better than his service? If you can - why wait, do show us. If you can't - then please let us, the private sector, work and let us try to make a normal living like the average people we are. Let us try to feed our kids - we're clumsy, many of us don't have the talent you would like us to have, we make mistakes, but for morality's sake, pick your targets wisely if you're going to spend any amount of time attacking something on this planet. Just for the numbers, last count says total death toll was 262 million (human lives, I repeat - 262 millions, that's one in ten people you know with numbers back then) on the 20th century just (just) due to this one concept called "the state" born out of the tormented tiny little "bully bean" sleeping in all of us always giving up to the temptation of wanting to destroy the neighbor's freedom and eventual attempts at making a living. If you keep on pushing strong enough with your hi-heel boot on the throat of what's left of the private sector, at the speed the overall lunacy on this planet is moving, we may well get to beat the record of damage in this century... Not sure what your exact goal is with attacking the private sector (did this guy break something that was yours? did he steal something from your kitchen? did he kill anyone you know?). You don't like it. Don't use it. Turn around and walk in the other direction. Let free people work. Please.

Anonymous said...

Groupon's reputation in Japan is irreparably shot. Recently, many of Japan's top women's magazine, etc. have been bashing Groupon mercilessly. They shan't recover.

Anonymous said...

the ceo needs to have his penis castrated with a dull razor ... what? yes yes i know it's slow and painful just the way he likes it