Friday’s Capital News:
Bargain hunters with a penchant for group buying sites have had to steer clear of the Kelowna based company GoSango in recent days.
After a prolonged period of public tumult, complaints that vendors weren’t being paid and consumers were being turned away with coupons in hand, the site has shuttered its online doors.
Halting sales is a decision, according to co-owner Michael Minor, that’s been made to give the business enough time to finish a sale to another group-buying entity, and ultimately right the course of the business that’s sinking under hundreds of thousands of dollars in debt.
“We’re working hard to get problem solved and pay all the merchants,” said Minor.
“Also, all the merchants who have been paid for the deals have a contractual and moral obligation to honour vouchers.”
According to Minor, they’ve been getting reports that even businesses that have been paid for services are turning away customers in an attempt to take advantage of the company’s shaky footing.
In the wake of news that the site was closing, however, the GoSango Facebook page was flooded with people saying they’ve contacted many vendors who will follow through— some of which were even among those that GoSango never paid.
“If anyone has their vouchers for the Try It Music Classes with me, I will still honor the vouchers,” said a woman identified online as Wendy Wardill Puttick.
“I have not been paid by the company, but I still wish to honor your vouchers. If possible please contact me soon, so I know that everyone has been able to receive their music classes.”
Others online comments, however, were far less favourable and GoSango has been painted as a bit of scam.
It’s a characterization that Minor has trouble with.
By his estimate, the company has a long history of customer satisfaction despite having been in jeopardy for some time.
Only recently had conditions become dire enough that impacted clients.
“I’m not denying there have been merchants have been unpaid in last couple of months,” he said, noting he was working hard to fix things because if he lets down his clientele, he’s letting down his “friends and family” who have made Kelowna home.
“But the last six weeks has made running the business difficult. We’ve been caught up in sensationalism and soundbites.”
Minor and his partner have sunk well over $1 million into the business, and despite the site’s popularity, he said they “never made a nickel from day one.”
Things turned really sour at the beginning of 2012 when they became embroiled in a legal battle with former parent company Twongo.
They licenced rights to the Canadian leg of the company for $500,000, when they could have struck out on their own for much less.
The company then changed its name to GoSango, restructured, started to make improvements. Improved budgets made them appealing to another buyer, and they went through the process to sell.
Then, at the last minute, the buyer pulled out and Minor and his partner were in trouble again, and starting to fall behind in paying vendors.
It’s a story that leaked quickly, and news organizations made a lot out of it.
“Now every two weeks, another story comes out,” said Minor.
In that time, monthly sales plummeted from the usual $120,000 to $200,000 to a dismal $40,000.
It’s made continuing on untenable and, worse by Minor’s estimates, put a new potential sale in jeopardy.
The easiest way to protect both vendor and consumer dollars, he said, is to pause and allow the business database to be sold to another group buying business.
“If nobody wants to buy us, we have to close the doors, which we don’t want to do,” he said.
“I’ll fight to my dying breath. My friends, family , parents, brothers and inlaws …those are my customers, and the last thing I want to do is let them down.”
Meantime, customer service is dealing with individual issues and Twongo has agreed to continue hosting the GoSango website through the month of October to allow continued access to subscriber and merchant accounts.