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Comment by waterside81 | Hacker News Reader

Exactly what we've seen. Our first Groupon was at a 50/50 split, no exceptions, no wiggle room. Our latest was at 70/30 in our favour.

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That's the "race to the bottom" effect in a market with low barriers to entry.

Groupon's business is compiling and maintaining two lists: (1) a list of local businesses, and (2) a list of email subscribers.

How it took billions of dollars and tens of thousands of employees to compile those lists, I will never understand. I still cringe every time I hear people promising that the "local market" will be "HUGE".

The "daily deal" space is rapidly being turned into a commodity service. I'd expect the splits to become even more favorable for merchants. How low can it go? Probably all the way to 10% or less for Groupon.

Yup, and the lower the discount, the less excited the customers. Groupon is example of there being no free lunch.

Of course you can make customers happy.. anyone can.. just give stuff for free or 50% off, but how do you create value without giving it away? Groupon has no answer for that

Which they seem to be nowhere near efficient enough in closing sales to local business to make money at that rate. Maybe eventually after every local business has been introduced to the concept if it really has legs it will become self service.

A point I make again and again is: how will Groupon compete against copycats, large players and niche-specific versions of it's service?

So far the only thing I've heard is crickets... Groupon as a service is a great idea, as a stock, GRPN is overpriced.

Was it a difficult negotiation?

I can't imagine that it was. Having worked at a deals startup myself and spoken with many business owners who have done Groupon/LS, all they have to tell the company is "Well [insert competitor here] is giving me 70/30". They'd rather lower their commission than walk away from the deal. This will be a slow race to the bottom, although I'm encouraged to see Groupon experimenting with loyalty and analytics components. Regardless of popular sentiment, the SMB space has been underserved for awhile now and if they do figure out how to make it work, then they'll own local. I wouldn't count them out just yet.

Not in the least. They, and other daily deal sites, will take whatever they can get.

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