A group buying company is refunding more than 800 customers who bought a discounted KitchenAid mixer through its website, after it noticed discrepancies with the product’s authenticity.
But the supplier of the mixers said it believes the accusations are untrue and is seeking legal advice.
It isn’t the first time a group buying company has refunded customers after failing to fulfil a deal, but it’s one of the largest – group buying company SoSharp sold about 820 of the mixers.
The website posted the KitchenAid deal last week, offering the appliance for just $345 – a huge discount from the retail price of about $800. The sale provided SoSharp with a windfall of about $282,000.
But SoSharp chief executive Daniel McDonald told SmartCompany this morning he became suspicious the product wasn’t quite right.
“The deal went live, and after looking at the material, and talking to the KitchenAid people, I didn’t feel comfortable.”
There was a key discrepancy between shop-bought KitchenAid products and the discounted product offered on the SoSharp site – a safety guard to keep users’ hair from being caught in the mixer was not included on the discounted model.
“[The company] just didn’t provide me with enough material to give me the feeling that everything was above board and suiting Australian safety standards,” he says.
“The merchant wasn’t able to give me that level of comfort that the mixer had this particular component, and that it met standards. I just had to pull the pin.”
McDonald had fears the product could have even been counterfeit.
“Potentially, I’m not sure.”
But the supplier of the product, Adelaide-based Panda2U Business Solutions, rejects the accusations.
Owner Linda Stapleton said: “We believe the accusations are untrue, and we are actually seeking legal advice”.
She declined to give any further comment.
She’s not the only one contemplating legal action. McDonald says he’s now focused on providing shoppers with refunds, but didn’t rule out a legal move against Panda2U.
“We’re just focused on providing refunds. After that, we’ll consider our options.”
But when asked why the deal went live in the first place, McDonald said the discrepancies weren’t obvious until due diligence had proceeded.
“It wasn’t that obvious. All the products had the corresponding materials, and it took a call to the local crowd here [KitchenAid] to make sure the product met all the criteria.”
KitchenAid was contacted by SmartCompany, but referred all inquiries to SoSharp.
This isn’t the first time this type of bungle has occurred in group buying. In 2010, Cudo refunded customers who bought vouchers for cupcakes after it was inundated with orders.
What is unusual is the size. Earlier this year Scoopon handed back $1 million in refunds after the Air Australia collapse.
SoSharp’s deal is smaller, but the company will be handing back more than $280,000. It comes at a critical time for group buying sites, as smaller businesses fight to compete over the scraps left by tent-pole businesses Scoopon, Cudo and Groupon.
SoSharp sent a letter to customers explaining the situation, while McDonald says the entire situation has been “disappointing”.
“At the moment, I’m just focused on getting the money back to customers, getting this mess cleaned up, and then I’ll look at our options.”
This article first appeared at SmartCompany.
