The key differences I see are: * Groupon takes a large cut of the coupon purchase cost - up to 100% if Posies Cafe is to be believed. So it's more like a 80-10

The key differences I see are: * Groupon takes a large cut of the coupon purchase cost - up to 100% if Posies Cafe is to be believed. So it's more like a 80-100% off coupon as far as the shop is concerned. * All income is realized up front. Costs of the promotion are going to be known 100% and quickly after the "coupon" is printed. The actual impact of that could be spread over a long period of time. * People feel obligated to use the coupon because they paid money for it. I'm sure the redemption rate is a lot higher on Groupons - it feels like an awesome deal when you buy, it has the urgency of time running out so people are more likely to buy if they are on the fence, and then they want to spend the bought coupon, because otherwise it's lost money. If you can get around the (allegedly) absurd Groupon cut (which it looks like you can with negotiation), and you can price your discount so that you break even, Groupon could be a great way to drive business. The only thing Groupon is doing that seems even slightly "evil" is the high cut, but any business owner should look at that and make a decision based on the numbers and either negotiate a better cut or walk away. But while Groupon might be a great way to drive business, I'm not convinced it's a good way to drive GOOD business for all businesses. The site draws extreme bargain hunters, and those are the sort of people that are not going to be loyal and aren't likely to come back without a coupon. So I'd say that the blame is even more on the business owners if a Groupon goes wrong. The fact they know their total maximum liability before they even start the process makes this even better than a newspaper coupon campaign. With the tools they have at their disposal (not doing the groupon, negotiating the cut, setting a max number of sales), they are to blame if they lose money on the deal. It sounds like (from the article) that most companies manage that aspect ok, they just don't realize how bad a set of customers they are going to get out of Groupon. That's purely the numbers influencing them into running the campaign, but if they broke even, then so be it. They can just mark it as a lesson learned and move on.