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House of Assembly - Fifty-Second Parliament, First Session (52-1)
2011-09-28 Daily Xml
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GROUP BUYING SITES

Ms FOX (Bright) (15:11): Of late there has been considerable parliamentary interest in group buying sites. Group buying online works on the following basis: you, the consumer, sign up to a site such as Scoopon, Living Social and Ouffer; you will then start receiving deals at a fraction of their value—dinners for two, clothing, anything else that can be sold.

This form of bargain buying is becoming increasingly popular with online shoppers. As the Hon. Gail Gago has recently pointed out in another place, Consumer and Business Services has received some 22 complaints about group buying sites since 2009. That number is growing, and the Hon. Gago is right to warn consumers to be very aware of their rights when buying from these sites. However, perhaps a caution should also be extended to those small businesses in South Australia who choose to get involved with group buying sites.

I have recently been approached by a constituent who owns a very successful small business in the city centre. The website they dealt with was Scoopon, arguably amongst the most high profile of these sites. Scoopon negotiated with this business a deal that would see the business offering services for approximately $50 which ordinarily would have cost $400—a significant discount.

When the business owners met with a Scoopon representative they were advised not to cap the number of vouchers, not to limit the amount of vouchers to one client per voucher and not to make the vouchers available on certain days only. No suggestion was raised about advertising the opening hours of the business. I should add that it was the first time my constituents had ever dealt with a group buying site.

When the promotion began, my constituents were very worried about the number of vouchers that came flooding in, saying there were too many to handle. My constituents asked to have their promotion removed from the website but were told to 'just go with it'. This small business expected the following outcomes from their participation with Scoopon's scheme. The business owners wanted to: increase their business on Mondays and Tuesdays; increase their client base; profit from repeat business; reach a larger audience through online advertising; and be able to accommodate all vouchers sold in the six-month time period.

However, as a result of this group buying exercise, the business had to extend the vouchers for 12 months, employ extra staff to cope with the demand and deal with abusive clients who were angry about the wait to get their services and the fact that the business did not open on the weekend. The business owners have been threatened with legal action by clients, and the business has now been running at a loss since May. As well as these pressures, Scoopon has been issuing some refunds to clients who are not entitled to them and then charging the business the full cost of reimbursing them, including the commission that has already been taken out.

My constituents are really worried that this series of events has affected their reputation. This is a business of some 10 years' standing which has never experienced anything like this before. They have had no follow-up from the representative in Adelaide, and queries to the head office have gone unanswered. This story is very important because it is the business point of view.

Often the stories about these sites are about the consumer's point of view, that they represent businesses badly or only focus on the benefits of buying services and products at a cheap, affordable price. The reality is that on the other end of this we have businesses who are really suffering. I think we all know in this place that small business in South Australia is the biggest industry that we have, and I just warn them to be very, very careful if they get involved with this kind of scheme.

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