Is Groupon Model Good For Your Business

venkatesan | May 3 - 2011

Millions of people around the world receive deals every day in their mail box. Hundreds and thousands of people used to buy some of the deals they like. Every day deals are sent to the subscriber by the city they selected. Due to the huge discount offers, thousands of people every day join the group deals websites to receive the offer. Group deals concept get good response from both buyers as sellers. Groupon is the company who made the group deals into big success. The main reason for the success is buyer gets minimum 50% off from the product costs.

Due to this huge discount offers people attracted to these sites and buy the products. They enjoy their favorite products at cheaper cost. This deals not only benefits the buyer it also helps the merchants to get new customers. In the short term it may be non profitable or loss for the merchants but in long term their business will grow up. Lot of groupon clone websites are launched by small and big companies every month due to the big success of Groupon.

How Groupon Deals Works?

Take an example if a perfume cost is $100 when the merchant offer the product for deals it would be offered at $50 on Groupon that mean 50% of discount from the original price. The discount of product or service is minimum 50%. If a buyer buys the deal at $50, Groupon keep the 50% of the product costs for their service that is $25 and the remaining will be credited into the sellers account. Groupon accumulated the money and will send it to the merchant latter.

In the recent months lot of groupon clone websites launched their service. Livingsocial is the big competitor for Groupon. Before offering a product or service to groupon the merchants should first calculate the risks involved in the deals other wise it will be a big loss for the merchants

A seller or merchant should calculate the business needs to make the deals big success like additional man power requirement, infrastructure needed and tools etc. Groupon deals are best suitable for long term benefits instead of short term.