Groupon Coupons: Should You Buy A Coupon From Groupon?

Is Groupon for real?

Can you actually get something for nothing? Groupon offers steeply discounted coupons on local eateries and leisure activities, but do they really give you something for nothing?

The Groupon business model is largely based on targeting local consumers with local opportunities. The architects of the Groupon system realized that the burrito store on the corner can't very well sell lunch on eBay: they needed a very different mechanism for attracting customers.

On crucial point that is well understood by all restaurant owners is the value of traffic. They need warm hungry bodies coming through the door on a regular basis. Sometimes they are willing to purchase a little traffic. Sometimes they are willing to deeply discount goods and services to attract customers. They are willing to prime the pump by offering up sweet deals that seem almost too good to be real. A customer with a credit card who has been 'bribed' into sitting down for a meal will typically spend much more than the cost of a coupon, provided the coupon is properly structured.


Another huge benefit of restaurant traffic, even if it walks in with a huge coupon, is word-of-mouth advertising. Most eaters tend to enjoy their meal even more when they are paying a pittance for it. These folks will let everyone know what a great time they had. Their neighbors, family members, and co-workers, will all hear about the wonderful bistro in the shopping mall. The coupon has paid for itself simply by generating positive chatter around town.

A Groupon Possibility?
A Groupon Possibility? | Source

What is a good coupon?

A typical coupon offers a few dollars off or a percentage discount on a meal. Some vendors go as far as including two-for-one deals. The two-for-one deal benefits both parties. Mr.Restaurant owner welcomes two paying customers into his establishment, while the customers each get a meal for about 1/2 price. Since more people eat as couples when they go our for a meal, the two-for-one coupon turns to to be a win-win deal for both buyers and sellers.

Another popular deal structure simply doubles the face value of the coupon. For example, cost-conscious consumers may be offered the opportunity to purchase a $50 gift certificate at a local restaurant for only $25. Obviously, this coupon is very simple to understand. The coupon holder doesn't have to read the fine print or order specific items from the menu. The coupon may be deployed against a party of 2 or a party of 12: it spends the same way regardless of the circumstances. A frugal customer can spend a few dollars on himself and walk out with the remaining balance still available on the coupon.

Note: Groupon fine print stipulates that coupons can be deployed for items at regular price only. Don't expect to double up with a two-for-one coupon from the local newspaper amplified with a Groupon certificate. We do want to keep our local businesses in business!

How does Groupon fit into the coupon world?

Groupon coupon engineers devised a deceptively simple framework for getting discounts into the hands of hungry customers. They understood that restaurateurs craved traffic in their establishments. They leveraged that knowledge to build a service that benefits all three interested parties.

Simply put, a store owner must be willing to 'sell' a coupon through Groupon and give Groupon a little taste of the profit. A 50 dollar coupon may sell for $25: Groupon keeps a small percentage and the restaurant pockets what's left.

It is a good deal?

It's a great deal for Groupon. Their overhead consists, essentially, of massive advertising combined with a welcoming website, They process transactions that link customers with coupons, but they don't actually deliver goods or services. They don't actually sell food, they simply convince local restaurants to work with them. 

It's getting to be an even better deal.

The word is out on Groupon. Potential partners are lining up in some cities. Groupon marketing mavens have customers flocking to them, rather than having to pound the pavement and woo tentative restaurant owners with promises of hungry mouths to feed.

Don't miss out on the Daily Deal!

One deal a day is a business model perfected by Woot.com and extended by Groupon.com. In the case of Woot, the deal is worldwide and can be fulfilled by traditional shipping services. Today's deal on Woot may be a cordless telephone or a high end vacuum cleaner. These offers are not limited to a region or a city: a family-style restaurant would be hard pressed to provide a satisfying dining experience via the Woot delivery system.

On the other hand, by creating a daily deal coupon and segregating by city, Groupon can serve a market of retail establishments that may otherwise be limited to sending flyers through the US Mail and paying teenagers minimum wage to hand out leaflets at the mall. Internet advertising is dirt cheap when compared to printing and distributing newspaper coupons, most of which end up in the recycle bin. An Internet ad can be programmed to appear on a web page that is relevant to the interests of the shopper and (hopefully) geographically relevant to them as well.

How does Groupon know where you are?

When an advertisement pops up on a web page you happen to be viewing, Groupon servers have already calculated your location and delivered a coupon offering. The offering is computed to be geographically close to you.

They use your IP address to decide where you are.

Whenever you point your browser at a web site, a number referred to as your IP address is transmitted to the site. Most sites couldn't care less where you are sitting, but your IP (Internet Protocol) address can usually be a mostly reliable indicator of your physical location. Groupon has little to lose if they 'miss' you by a few hundred miles. The cost to them is minimal and you can always adjust your location after arriving at their web site.

What kind of stuff can be couponed?

Theoretically any product or service can be Grouponed. The traditional business model for the company currently consists of luxury services such as leg waxing and spa treatments, along with food establishments. Huge discounts can be snatched up.

We observed these 'deals' on a recent visit to the site:

  • $400 of laser hair removal treatments for $99. zzzzappppp!
  • $60 of 'Modern American Cuisine' for $30. I can has cheezeburger, please!
  • $50 of merchandise from Nordstrom Rack for $25. Do you have anything more pretentious?
  • $100 of merchandise from Ashley Furniture HomeStore for $75. Do you have a CouchLamp?

What do we think?

Some awesome deals can be reeled in via Groupon. Shop wisely, but don't dawdle: most offers only last one day.

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Comments 25 comments

JBeadle profile image

JBeadle 5 years ago from Midwest

I'd only kind of heard about groupon so I was curious about what you had to say about it. My wife totally knew about it but hadn't visited their website. I'll have to check it out.


drbj profile image

drbj 5 years ago from south Florida

nicomp - I buy my mustard poupon with a coupon from Groupon.


nicomp profile image

nicomp 5 years ago from Ohio, USA Author

@drbj: How you do carry on!


fastfreta profile image

fastfreta 5 years ago from Southern California

Thanks nicomp, I often wondered how Groupon knew where I was, now I know. This is a very good and informative hub.


psychicdog.net profile image

psychicdog.net 5 years ago

Nice insights.I have been trying to do this with my own site for some time - a local directory and community noticeboard - problem is I'm not much of a salesperson and the area is slow to take up the internet as a resource like this. It can only get better. I reckon Groupon is a great idea.


kenneth kusz 5 years ago

Ijoined groupon two or threemonths ago. I bought. I no no longer receive yourdailydeals. How come?


akirchner profile image

akirchner 5 years ago from Central Oregon

That's really nifty - never heard of it!

Congrats on your win!!


stephhicks68 profile image

stephhicks68 5 years ago from Bend, Oregon

Super explanation of the groupon concept. My husband was asking me about it about a week ago - now, I'll send him the link to your hub! Congrats, Steph


oceansnsunsets profile image

oceansnsunsets 5 years ago from The Midwest, USA

Congratulations on your random drawing for the contest, and thanks for sharing this information about Groupon Coupons. I have been seeing them, but didn't know much about them.


Purple Perl profile image

Purple Perl 5 years ago from Bangalore,India

Congrats!


upWORDS profile image

upWORDS 5 years ago from Sunny Arizona

I love my Groupon coupons in my area! Good article!


Howard S. profile image

Howard S. 5 years ago from Dallas, Texas, and Asia

Well, I've certainly seen their ads all over the place. Never had any idea what they were about until now. This is very informative. Thanks and congrats.


Amy 5 years ago

Incorrect. Groupon doesn't keep a 'small percentage', Groupon keeps 50%.

Therefore, if a restaurant offers a $30 meal for $15, Groupon gets $7.50, and the restaurant has to supply that meal for $7.50.

Groupon would be okay if it kept just a 'small percentage', but as it stands they are simply ripping off struggling restaurants, and on occasions, actually running them into the ground since they can't recover from the losses incurred by doing a Groupon deal.


nicomp profile image

nicomp 5 years ago from Ohio, USA Author

Amy, you don't understand how business is conducted in a free society. The struggling restaurants to which you refer are lining up to *voluntarily* participate in a Groupon deal.


MarloByDesign profile image

MarloByDesign 5 years ago from United States

I second Howard's comments - had no idea what this was until now. Thanks for the information!


Galvez profile image

Galvez 5 years ago

Many businesses have started charging a mandatory gratuity (fee) to use a Groupon. These are not disclosed in the offer or on the Groupon, but once you have eaten the meal, you have no choice. Find out if there is a mandatory gratuity BEFORE you tip, otherwise, you will be tipping twice. Also, some places will give you sub-par food and service once you use a Groupon. I was a fan, but Groupons are quickly becoming more of a hassle than they are worth.


nicomp profile image

nicomp 5 years ago from Ohio, USA Author

@Galvez: It's highly doubtful that Groupon customers get subpar service or food:

1. You don't show your Groupon Coupon until you settle your account.

2. Wait staff are well aware that happy customers tip more. A Groupon user will be happier because they are saving money when they walk in the door.

3. No one is going to tell the cook which meals are destined for Groupon Coupon customers. The cook couldn't care less anyway.


MarloByDesign profile image

MarloByDesign 5 years ago from United States

Excellent point nicomp. I have never tried Groupon, but may based on your feedback.


Nina 5 years ago

I went out to eat with my daughter with a groupon ticket worth 20.00 value at beggers pizza. All we paid for were our drinks and dessert. What a great groupon


nicomp profile image

nicomp 5 years ago from Ohio, USA Author

Kate 55 minutes ago

I;m still waiting for a groupon coupon to come up that interests me. often the small print puts me off or you discover that the destination has limited opening hours.

I NEARLY GOT CAUGHT THE OTHER WEEK WITH A OFFER TO A STATELY HOME WITH A CREAM TEA THROWN IN. a TWO FOR ONE DEAL.

but i discovered that the stately home only opened on Sundays for three hours. So it would mean a long drive for only a few hours.

But I haven't given up on groupon, i still look out for offers.


kmauryo 5 years ago

I have a lady friend that is addicted to Groupons, she has disposable income and usually carries around a bunch with her when she leaves the house. Most of the time its businesses that "are going out of business" or hurting very badly. Used them 4 times in 4 different restaurants, all nasty food, all bad service, and usually attached is a 20% tip gratuity which I have never liked and automatic 20% , and these days customer service is so bad they only deserve 15% at the most. Be afraid be very afraid.


MarloByDesign profile image

MarloByDesign 5 years ago from United States

kmauryo, I tend to agree with you (except for movie deals). I saw a Groupon offer for $10 (for a $20 pizza gift card), yet you have to spend a min of $50 and eat at the pizza joint. Hardly a good deal when you pay $10 for the Groupon, and then another $30 out of your pocket at the pizza joint. And you must dine in, so add a $12 tip to your expenses!


SubmissionWork profile image

SubmissionWork 5 years ago from India

Generally their offer contains some kind of service or hospitality.

Such as discount on massage or beauty parlour service or any kind of restaurant.

Their discount is very much limited to the physical products.


sdcomb 5 years ago

I bought a meal on Groupon but when I tried to print my coupon, the email with the coupon wasn't there. I think I was scammed by Groupon.


nicomp profile image

nicomp 4 years ago from Ohio, USA Author

ahirschfield@---.--- 34 minutes ago

LOOKING FOR A COUPON FOR DYLAN"S RAW BAR IN GROSSE POINTE PARK,MICHIGAN

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