| The trouble is selling several thousand of them in a day (1) How does it matter whether I get 4K people to buy in in one day or over one year? That part is over-hyped and makes for great PR. I am in the same space(sort-of, blinkcoupons.com). Many retailers would prefer a steady flow of new customers over the year versus a one-time rush. So let's say you paid Groupon $40,000 to get 4,000 coupon sells by offering a 60% discount, I really believe you can spend $20,000 giving ads in the local paper with a kickass offer and get the same number of people to use your coupon(not just buy it). Remember, just because people buy the groupon does not mean they use it--good for groupon, not so much for the retailer which is completely banking on repeat biz. As a child in India, I saw newspapers sell out occasionally because they had a coupon. Back then, coupon by definition meant a crazy offer. Since, the idea of a coupon has been diluted to mean trash. And kudos to Groupon for being able to convince store owners to give select kickass coupons like they should have been doing all along. But I don't know why store owners will be paying Groupon 60% revenue when they can run an ad in the local paper for a grand and attract similar number of customers but at a lower customer acquisition cost than Groupon. (2) What's your product? If it's a virtual product(such as yours), I don't think the same ideas apply. People have been desensitized with online tools offering steep discounts. The same is not true with your local coffee shop. Distribution is worth paying for. Absolutely! Though this discussion is a more nuanced one. We're basically debating if all other things being the same, whether other distribution channels can provide a similar service to Groupon at a cheaper cost. I believe they can! But I'm biased. That's what my start-up is about :) |