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A few ways Groupon is helping local businesses: 1. Groupon is bringing offline local businesses online. The same way Google brought small advertisers/small bus

A few ways Groupon is helping local businesses: 1. Groupon is bringing offline local businesses online. The same way Google brought small advertisers/small businesses online. 2. Groupon could be a useful way for business to get some cash up front for future customers. That cash may help small businesses expand, instead of taking loans to expand. 3. Groupon cost of small businesses could be useful marketing cost since Groupon deal reaches out to many local customers. Slightly old but interesting read on this: http://www.evanmiller.org/is-groupon-the-next-google.html http://www.evanmiller.org/is-groupon-the-next-google.html Further, this article itself mentions "Note massive competitors like Google, Facebook, Walmart, Opentable, etc. already doing their own versions of daily half-off deals". As people have said "imitation is the best form of flattery". So many Groupon clones show that there is a demand for such a service from both small businesses and consumer sides. However, some of the accounting practices of Groupon and the way Groupon used recent investment money seems unusual and have raised a lot of eye-brows.

ookblah 15y ago
1. This is good, as long as these local business are being educated on the benefits/risks vs just being told it's good overall. 2. Groupon deals are used as a marketing tool to (hopefully) attract long-term customers/develop buzz. Merchants lose on every deal so I don't know what you mean by "cash up front". 3. Look at #2 Imitation may be the best form of flattery, but it may also just indicate that everyone is jumping into a hyped up market. Look at the aftermath of all the social networks. Except that Groupon doesn't benefit from user loyalty effects. IMO, it's unsustainable growth in it's current form. I think they can develop a profitable business (as they did before), but sustaining that hyper growth curve....not so sure. I don't understand what Groupon hoped to gain with it's "first-mover" advantage. Everyone I know (including me) who buys groupons does it just because they give the best deal for a specific business, not because I'm somehow loyal to Groupon. I will just as readily use Living Social or Buywithme or whatever other coupon site is out there. Until they fix this, the market will just be saturated with more and more players. Race to the bottom.
- mitultiwari 15y ago
  When a deal appears for a business on Groupon, people buy those deals that day and visit that business later on. That's what I meant by "cash up front". Yes, I agree with you that barrier to entry is very low. However, Groupon has so many businesses lined up (since they have maximum reach) that Groupon can choose the best deal to offer to customers. That's the advantage Groupon has compared to others.
cowboyhero 15y ago
Fair points, but: 1: This isn't exclusive to Groupon, and I'm not sure they're doing anything that CitySearch and AOL weren't doing in 1998. 2-3: Purely anecdotal but I've heard too many horror stories of small businesses being screwed by their groupon deals, essentially losing money on the discount and not attracting enough repeat business to justify the deal in the first place. The problem with the model is that it attracts customers who are focused on price, not value. That's at odds with the proposition behind many specialty stores and boutiques (eg vinyl records, hair salons, upmarket clothing, etc). Groupon as a standalone business just digitizes those local coupon books that used to come in the mail or be sold at bulk for ten bucks or whatever. That's a good web based business but not a great one.
- cookiecaper 15y ago
  I'm curious if Groupon has some minimum discount levels, because I frequently hear that people lost a lot of money on Groupon, and logically if you're going to lose a lot of money on a coupon you're offering, you won't offer it. Obviously some reduction in margin is necessary, but if it actually costs money to provide the service after the Groupon, that's a bit past the point of reasonability. The same rules that apply to traditional coupons should apply to Groupon because it's a similar target audience -- coupon clippers have never really been known to be "great customers". Is there a reason so many businesses provide such deep discounts to Groupon? Are they just caught up in the hype, and Groupon can demand huge discounts because so many merchants want to use it?
  - dagw 15y ago
    If everybody else is offering a 70% discount and you're offering a 15% discount, chances are people aren't going to bother looking at your offer. Also since there is a certain amount of hassle and risk (if its a business you've never used and heard nothing about) in using Groupon from the customer side of things, I'm guessing most people won't bother if the discount is to small. Saving 15% just isn't worth it, especially if you're saving 15% at place you're not even sure you really want to go to.
- tzs 15y ago

ookblah 15y ago

1. This is good, as long as these local business are being educated on the benefits/risks vs just being told it's good overall. 2. Groupon deals are used as a marketing tool to (hopefully) attract long-term customers/develop buzz. Merchants lose on every deal so I don't know what you mean by "cash up front". 3. Look at #2 Imitation may be the best form of flattery, but it may also just indicate that everyone is jumping into a hyped up market. Look at the aftermath of all the social networks. Except that Groupon doesn't benefit from user loyalty effects. IMO, it's unsustainable growth in it's current form. I think they can develop a profitable business (as they did before), but sustaining that hyper growth curve....not so sure. I don't understand what Groupon hoped to gain with it's "first-mover" advantage. Everyone I know (including me) who buys groupons does it just because they give the best deal for a specific business, not because I'm somehow loyal to Groupon. I will just as readily use Living Social or Buywithme or whatever other coupon site is out there. Until they fix this, the market will just be saturated with more and more players. Race to the bottom.

mitultiwari 15y ago
When a deal appears for a business on Groupon, people buy those deals that day and visit that business later on. That's what I meant by "cash up front". Yes, I agree with you that barrier to entry is very low. However, Groupon has so many businesses lined up (since they have maximum reach) that Groupon can choose the best deal to offer to customers. That's the advantage Groupon has compared to others.

cowboyhero 15y ago

Fair points, but: 1: This isn't exclusive to Groupon, and I'm not sure they're doing anything that CitySearch and AOL weren't doing in 1998. 2-3: Purely anecdotal but I've heard too many horror stories of small businesses being screwed by their groupon deals, essentially losing money on the discount and not attracting enough repeat business to justify the deal in the first place. The problem with the model is that it attracts customers who are focused on price, not value. That's at odds with the proposition behind many specialty stores and boutiques (eg vinyl records, hair salons, upmarket clothing, etc). Groupon as a standalone business just digitizes those local coupon books that used to come in the mail or be sold at bulk for ten bucks or whatever. That's a good web based business but not a great one.

cookiecaper 15y ago
I'm curious if Groupon has some minimum discount levels, because I frequently hear that people lost a lot of money on Groupon, and logically if you're going to lose a lot of money on a coupon you're offering, you won't offer it. Obviously some reduction in margin is necessary, but if it actually costs money to provide the service after the Groupon, that's a bit past the point of reasonability. The same rules that apply to traditional coupons should apply to Groupon because it's a similar target audience -- coupon clippers have never really been known to be "great customers". Is there a reason so many businesses provide such deep discounts to Groupon? Are they just caught up in the hype, and Groupon can demand huge discounts because so many merchants want to use it?
- dagw 15y ago
  If everybody else is offering a 70% discount and you're offering a 15% discount, chances are people aren't going to bother looking at your offer. Also since there is a certain amount of hassle and risk (if its a business you've never used and heard nothing about) in using Groupon from the customer side of things, I'm guessing most people won't bother if the discount is to small. Saving 15% just isn't worth it, especially if you're saving 15% at place you're not even sure you really want to go to.
tzs 15y ago