Groupon Coupons: Should You Buy A Coupon From Groupon?

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 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!

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.

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.

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.

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?

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

Some photos courtesy of pdphoto.org.