I don't know about Groupon, but it's flat out wrong to say that small businesses don't have the problem Groupon claims be addressing. They clearly do have the problem.
I said spend five minutes emailing. If I'm selling widgets for $25 when the usual, accepted price in commerce is $100 (which is the standard Groupon deal, right?) and I spend five minutes emailing the widget fanatics mailing list, I guarantee that a LOT of people will discover my offer to sell widgets for $25. The deal will spread all by itself given a very minimal amount of priming by the business owner.
It won't spread if I'm offering to sell widgets for $99 instead of $100. But $25? Yes.
> I don't know about Groupon, but it's flat out wrong to say that small businesses don't have the problem Groupon claims be addressing. They clearly do have the problem.
No, no businesses have a problem of not being able to find customers to buy things at prices well below the store's cost. If I buy wine at $10 per bottle and instead of selling it at $20/bottle, I decide to sell it at $5/bottle, I assure you I will find plenty of customers. And that's what Groupon is offering - the "opportunity" to find customers who are willing to buy your products for below what it cost you to put them on your store shelves.
A useful service would be to find customers who are willing to pay full retail price for your products. That's a service that retailers would and should pay money for. That isn't what Groupon is offering.
The intent is that once you try and if the businesses treats the customer well, they would pay full price the next time. It is the businesses who don't understand this, that don't end up reaping the benefits.
People persist in these weird economic analyses of "daily deals" sites as if they have anything to do with the economics of breakage or marginal cost. That's not the point of daily deals. The point of daily deals sites is that they're promotional channels, and that they're more effective than local advertising, which is a notorious black hole.
Groupon ensures that the deals are good