Osechi's Bad Food Incident Hurting Groupon Sales In Japan

Groupon's Japanese sales are showing clear signs that the Osechi incident has really dented its reputation in Japan, so much so that users are backing away from other group dealing sites as well. Coupon-jp, a Japanese consumer research firm, tracked coupons sold on Groupon and nearly 150 other Groupon clones in Japan during Jan 2011, and compared it with coupon sales by each of the daily deal site for Dec 2010. Coupon-jp's findings show that Groupon Japan's sales have decreased by 14% from December, with Pompare, a No 2 in group deals in Japan, seeing a decrease of 18% in its sales. Overall the entire industry saw a decline of 16% in sales in January, compared to Dec, 2010. This might also be a result of weaker consumer buying in January, as compared to December which is a holiday season. However, coupon-jp believes that consumer sentiment towards daily deal sites has been significantly dented, with users believing that with deals you will never get what you see. Osechi are specially prepared dishes in Japan, that people make to eat during the first three days of January. Traditionally these dishes were made at home before January, and then preserved so that females don't have to cook during those three days. Now people have also started purchasing complete meals from restaurants and then store these meals for 3-7 days. Groupon entered into a deal with Japanese restaurant Bird Cafe, which agreed to deliver Osechi meals for four persons at a discount price of 10,500 yen, instead of the regular 21,000 yen. In order to understand what users would have felt when they received their meals, do take a look at the images of the advertised vs delivered meals below. Not only, were the meals delivered in 4 parts instead of 8 parts, Groupon's internal research later found that 8 foods in the meals used different ingredients than the ones advertised. Bird Cafe on its part claims that it was only expecting 100 order, but instead received 500 orders. This resulted in a mess, since it was not capable of delivering so many orders in such a short amount of time. Mr Kenji, the ex-president of Bird Cafe, said that initially they were in two minds about cancelling the orders or going ahead with reduced meal per package. However, they decided to go ahead with the orders with reduced meals as they felt that they have an obligation towards their customers. Mr Kenji further stated that they received no advise from Groupon Japan about how to handle the situation. The fact that Bird Cafe had no direct contact with anyone at Groupon after the deal was initiated also compounded matters. In addition to an apology from Groupon's CEO, Bird Cafe also offered an explanation on their website. But the fact that they have posted it in image format has annoyed the customers even more, since they think that Bird Cafe has done so deliberately in order to avoid search engine indexing. Groupon received a lot of press coverage (both from cable and print media) ever since the incident and many pundits believed that this would actually promote Groupon. However, Groupon sales are showing that bad press is really what it is, bad press. [Osechi Image via Asiajin]

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Osechi's Bad Food Incident Hurting Groupon Sales In Japan

Groupon's Japanese sales are showing clear signs that the Osechi incident has really dented its reputation in Japan, so much so that users are backing away from other group dealing sites as well.

Bilal Hameed

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Bilal Hameed