Jan 21, 2013

Vietnam - Groupon websites may be asked to pay deposits and take insurance policies

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VietNamNet Bridge – The Ministry of Industry and Trade (MOIT) is considering laying down a new policy, forcing groupon websites to pay a deposit and take insurance policies in order to protect consumers’ rights.

The new regulation is being considered by the watchdog agency after a big trouble occurred with Nhom Mua Company, running a groupon website, which once frightened customers.

On November 13, 2012, the Board of Directors of Nhom Mua had a press release informing the appointment of Kyle Pham into the post of the new Managing Director of Nhom Mua to replace Tom Tran.

After that, Nhom Mua informed the halt of operation in order to ensure the security of the database. Later, on December 11, 2012, Nhom Mua once more released a similar notice without warning on the website.

As such, just within one month, Nhom Mua halted its operation two times, while a lot of shops refused the vouchers issued by Nhom Mua, which then frightened customers.

The problem was only settled on December 24, when Nhom Mua officially announced the resumption of the groupon website after a period of reshuffling its workforce. No more troubles have occurred since then.

In late November 2012, after 20 partners came to the head office to ask for debt payment, Dealsoc, a groupon website also announced the operation halt due to the internal disagreement.

A senior executive of Hotdeal said though Nhom Mua’s trouble was sourced from the internal problem, the trouble still caused a shock to the groupon. Customers, who lost their confidence in groupon model, have become more hesitant to buy goods from similar websites. More seriously, foreign investors have stopped invested in e-commerce websites.

“Nhom Mua took a false step which led to the negative responses of consumers and badly influenced other groupon brands,” the executive said.

According to an e-commerce expert, the trouble of Nhom Mua has had big impacts on three main subjects, including consumers, product and service providers and foreign investors.

The purchasing power has been reported by groupon websites as decreasing by 10-20 percent after the trouble with Nhom Mua. It is expected that customers would still keep placing orders, but they would not make big purchases any more.

An executive from Hotdeal has noted that the boom of the groupon market is over, and it’s now the time for hotdeal and other websites to prepare for the big changes in the time to come. One of the most important tasks for the immediate period is to restore the confidence of customers.

“2013 would be a stormy year for the groupon model. It is very likely that after some other troubles occur, only a few big brands would still exist,” he said.

Nguyen Ngoc Diep, Director of Vatgia, which is running cucre.vn, has noted that the market has nearly got saturated that it is the time to think of other more suitable models. Cucre, for example, has become a website which provides thousands of kinds of goods at low prices, while it is no more a groupon website.

Diep has suggested that it would be better to ask groupon websites to pay a deposit and make payment every day in order to minimize risks.

Agreeing with Diep, Tran Huu Linh, Head of the E-commerce and Information Technology Department under the Ministry of Industry and Trade has revealed that the department is considering setting up some requirements on groupon websites to protect customers’ benefits. They may be asked to pay a deposit or take insurance policies when doing that kind of business.

The requirements would be set up in the draft decree on e-commerce which is expected to be submitted to the Prime Minister in January 2013.

Buu Dien

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