He could not confirm how many customers have paid money without receiving goods, nor could he confirm how many merchants are owed money.
He also said he could not reveal the names of the owners of the company due to a “confidentiality agreement” and downplayed his involvement, saying he was merely a “bit player” in the business.
McDonald did not offer a reason for why businesses and customers were not informed of the company’s decision to wind up, or why there has been no correspondence until now.
Yet this explanation comes after McDonald changed his LinkedIn page to show he was looking for new opportunities – despite no customer having been told of the company’s demise.
“I deliver on what’s been mandated by the board,” he said.
McDonald did confirm the KitchenAid controversy in July was a major factor in SoSharp’s downfall. At the time, the sale provided SoSharp with a windfall of about $282,000 – and it pledged a return once it was discovered the products were faulty.
“The company obviously struggled to recover from that, being a small organisation. I dare say it played a significant role.”
“The commercial reality of the business is that it never got to a position where it was breaking even. It came close, but the KitchenAid situation set the company backwards at a very important time.”
McDonald suggested he was not privy to the decision to wind up the company, saying “I’m disappointed the company is being wound up, to say the least”.
However, after an initial conversation he later called SmartCompany and confirmed SoSharp has been purchased by another unknown entity. McDonald would not reveal the name of this company.
McDonald says legal and finance teams are working with the business now, and customers and merchants will be contacted.
But it’s not known at this point whether they’ll be paid.
It’s a sad indictment on the popular group buying industry, which has suffered massive criticism despite its success.
Groupon’s shares in the United States have lost nearly 90% of their value as customers move away from more general deals to product-based discounts.
Merchants have also criticised many group buying companies for their redemption methods.
The group buying industry has been lucrative for major players, eight of which make 90% of the revenue in Australia, but is more tumultuous for smaller companies.
While many have done well by focusing on product-based deals, the industry itself is low-margin and relies on unusual payment systems that can put a strain on cashflow for both merchants and the company offering the discounts in question.
Offering refunds, or even delays in payment, can be disastrous for a smaller business – which is why so many of them have fallen over or have been acquired by larger entities.
