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04 June 2011

"Groupon is Effectively Insolvent" Is the online coupon market the next bubble to burst?
Not the entire coupon market, but Groupon's particular model is highly suspect.
posted by Ardiril 04 June | 18:53
What about their particular model is suspect? I'm not familiar enough with them to know how they're different.
posted by ThePinkSuperhero 04 June | 19:15
Burst? Was it ever formed?
posted by Eideteker 04 June | 19:20
Perhaps they have changed, but they didn't offer many options to their clients. It was structured around coupons that offered deep discounts valid over a short period of 2 or 3 days but with no incentive to revisit. My details may not be accurate but that was the degree of rigidity.
posted by Ardiril 04 June | 19:24
If 65 MeChazens are willing to pony up $75, I'll offer 60% off of the price of admission to see my surprised face.
posted by ufez 04 June | 19:31
I can't understand how the formula (offer things for 50% off then give Groupon half of THAT) can appeal to any but the most extremely overpriced luxury sellers. I understand 'loss leaders', but this is really taking a bath (25 cents on the dollar? a BLOOD bath) with no guarantee of repeat business (in fact, I suspect that Groupon customers will be significantly LESS likely to come back... they'll just go on to the next Groupon deal). I foresee a wave of bankruptcies of Groupon-dependent stores and restaurants in the near future. And why isn't Groupon making money off the 50% fee they charge their retail partners? They're spending it all on Sales, mostly trying to break into new regional markets, but it is not an easy sell. This is, to me, one of the WORST business models of the Internet Era. Why does Wall Street love it? Well, if I were prone to conspiracy theories, I'd think it goes back to running mom-and-pop local businesses OUT of business to be replaced by the big, corporate megachains. Fortunately, I'm not that paranoid, but still, when Groupon crashes, and it WILL, it'll take a lot of small businesses with it.
posted by oneswellfoop 04 June | 20:23
I heard a story on NPR several months ago (actually, it may have been on Marketplace) where they talked to business owners who had done a Groupon coupon once, and were now saying "never again." They got a shitload of business for one day, lost money, and saw no repeat business afterwards. The Groupon model only appeals to deal-chasers, and deal-chasers aren't the kind of customers a business needs to survive.
posted by BoringPostcards 04 June | 21:56
I hope that, if Groupon ever goes under, their trademarks are purchased by the Grey Poupon people.
posted by box 04 June | 22:01
We use Groupon a lot but I have heard that some retailers aren't all that thrilled with the deal. Their company seems hugely labor intensive, they need sales folks everywhere to keep coming up with deals.
posted by octothorpe 04 June | 22:13
We use it a lot, too, but apparently, I use it completely differently than most people: I only ever buy groupons for business I already patronize. The one exception was the half-price dental cleaning. I didn't like the dentist, though.

I'd be sorry for it to go because I like being able to get a discount at a place I'm going to anyway. It will be interesting to see if it changes, instead of folding.
posted by crush-onastick 05 June | 09:24
I haven't tried it yet. I'm what you call a slow adopter, or something. Anyway, here's a blog post from a restaurant owner on how she lost thousands of dollars by trying Groupon.
posted by moonshine 05 June | 13:48
Here are a few more articles on Groupon's business model:

Is Groupon ruining retailing?
Is Groupon good for a small business? and
Groupon: Good for you, bad for business?

Apparently, "everyone and their mother is walking in the door with discount sites" now, so I do wonder if/when one of those other sites is going to get the edge on Groupon and make it old news.
posted by halonine 05 June | 15:26
NYT had a long article about how Groupon is banking in the quality of its writing to stay ahead of the competition. I've bought quite a few Groupons so far, but found that article really weird -- I can't think of a single instance where the writing was a factor in my decision to buy or not buy a Groupon -- in fact I think I rarely even read their "funny" little write-ups (because they're just not that funny). So if that's supposed to be their piece de resistance, I wish them best of luck, but am not holding my breath...
posted by AwkwardPause 06 June | 09:45
I heard the same interview, BoringPostcards. I have bought one Groupon offer. It was to a yoga place I already liked and frequented. I was tempted to buy the Old Navy offer and a paddle board lesson. I never buy the restaurant ones, I especially won't after I heard the NPR interview. I think Groupon is best for business owners that are going to hold a class anyway -- like pilates, belly-dancing, or yoga. Restaurant owners get a raw deal.
posted by LoriFLA 06 June | 21:44
I buy one every so often. I bought the Old Navy one. I buy wine ones when they come up, although the shipping costs mean that you nearly break even anyway.
posted by gaspode 06 June | 21:53
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