Groupon Is Offering Some Merchants 80/20 Splits

Andrew Mason

[credit provider=”AP Photo”]

We’ve seen credible evidence that Groupon is offering some merchants 80/20 revenue shares, meaning that Groupon keeps only 20% of the sales of its coupons, instead of 50% as usually. It’s unclear why this is happening. One possibility is that Groupon is doing this in a handful of markets to grab marketshare, which would make sense. 

Another possibility, much more worrisome for Groupon, is that competition is eating into its margins in a serious way, and that this could be a much more widespread phenomenon. If so that could have a pretty big impact on the company’s top and bottomline, and would prove right the Groupon naysayers who have been saying that in a business with such low barriers to entry Groupon’s competitive advantage would eventually melt. 

When asked about this, a Groupon spokesperson gave the following non-comment: “our revenue split … are always negotiable and determined by amount we anticipate selling, size of the market, frequency the merchant has worked with us, etc. 80/20 isn’t the norm.”

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