Ultimately I feel Groupon's model is flawed.
Local businesses need to build loyal relationships with the customers. Using Groupon makes local businesses reveal their hidden card, which is their cost of doing business. If local people realize that this local company can still make some profit after taking this much reduction in price, how will they react to the current price that the local business is setting?
In addition, the profit margins low, and the enormous flow of sudden customer attraction compromises the quality of service. Unless the local business is far superior than all of its competitors, I doubt Groupon will create much value for the business. With the current business model, customers walk away happy, Groupon walks away happy with a 2 year existence and already valuation of 5 billion ( I would say happy as well) , but the local businesses are left with disappointment, like the unsatisfied wife after the husband's premature ejaculation.
In addition, the profit margins low, and the enormous flow of sudden customer attraction compromises the quality of service. Unless the local business is far superior than all of its competitors, I doubt Groupon will create much value for the business. With the current business model, customers walk away happy, Groupon walks away happy with a 2 year existence and already valuation of 5 billion ( I would say happy as well) , but the local businesses are left with disappointment, like the unsatisfied wife after the husband's premature ejaculation.