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Comment by pclark | Hacker News Reader

> I’m not convinced Groupon has staying power. Sure, it’s uber-popular but how much longer will consumers be captivated by the flurry of deep-discount offers hitting their inboxes?

Ah yes, because everyone knows consumers hate saving money, this is why coupons have never taken off in the past. Wait a minute. In 2009 hundreds of billions of actual coupons were used.

Of all the companies people cite for a bubble, you choose the one making money hand over fist? Seriously?

I think the most ridiculous statement people say is that Groupon isn't defensible, guys, Groupon has thousands of people calling companies every day - guys in a garage eating pizza can't exactly do this. (also, if you're saving people money, people have a tendency to remember your brand)

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The problem is that Groupon's customers aren't actually the people buying coupons, it's the businesses selling coupons, and we've heard plenty of horror stories from that side of the coin. Whether that aspect is enough to dig Groupon's grave is an open question, but let's at least make sure we're approaching the question from the appropriate angle.

Have there been that many stories? I've heard a couple from small time coffee shops that may not be the best financial planners, but those few sad stories seem to reverberate without a lot of new voices joining the chorus.

I'm going out on a limb here, but has anyone else noticed that HN has a tendency to hate on Groupon?

We see dozens of articles like this reach the front page predicting Groupon's doom, always citing the same dissatisfied coffee shop, always attacking imaginary business models. I'd like to see someone refute Groupon's value as an advertising tool, or even compare it to existing alternatives.

On top of that, a class of hacker news user exists who spells "Groupon" groupOn. It seemed liken impossibly childish insult, to mangle something's name, so I assumed it was an accident or maybe that's how Groupon used to be spelled when it was a startup. Well I looked it up, and no.

Personally, I tend to hate it because I am convinced that coupons are evil. It is just a way to control people's behaviours and turn them into consumer sheep, which I resent from the bottom of my heart.

I root for startups that empower people and open up new opportunities, not for ones that have found a loophole in the human psyche and exploit it to the maximum.

I wouldn't say they're exploiting a loophole in the human psyche, rather a very well known aspect of it.

It's also a brilliant business model for a recession and financial crisis. In most instances it's win-win-win:

- Groupon makes money

- people get huge discounts, and save money if it was something they were planing to buy anyway.

- businesses both make money (assuming they worked out the math of the deal correctly before accepting it) and gain huge exposure.

I suppose the only losers are wherever people would have spent that money had they not bought the groupon, but that's hard to quantify (bought the same thing at a higher price? bought something else? saved it?).

I can't think of many more innovative business models for a distressed economy.

The losers are the waiters and employees of the featured businesses. I know plenty of people in the service industry who dread the days their restaurants or shops offer discounts on Groupon. Sure it makes money for the company, but in many cases a Groupon deal kills morale within the business.

That on top of the exploitative nature of many (most?) Groupon users, where they buy a Groupon and never revisit the business after they use their discount.

Groupon is a great business, but some concerns about the quality of the leads arise. We need the Glengarry leads.

I dread the day I cannot get into my favourite restaurant because there is a line of Grouponies around the block . . .

Groupon is creating new value and opportunities. Small business now have an easy, trackable, pay-per-action source for customer acquisition. It's hardly exploitative of customers either because you can get a refund if you're dissatisfied (see the Groupon Promise).

Outside the US coupons are not a big business, at least in the countries I know. So I wonder if it will translate as profitably in the rest of the world.

Here in brazil (at least in são paulo) there are around four companies (groupon included) fighting tooth and nail for this market, even using black-hat-ish techniques (unsolicited email, misguiding website, impossible-to-unsubscribe mailing lists, deceitful ads, etc).

I think most urban-ish places with a capitalized youth are a ripe market for coupon-type businesses.

My personal theory? There's a lot of jealousy in HN users WRT groupon because they didn't start it. It's not an unbelievably complex idea -- I'd wager that many Groupon-hating HN users probably think that their current startup is much more complex/important/awesome. They're bothered by something so simple making so much money.

At least that's how I initially felt about Groupon.

At the same time, my attitude seriously limited my business. I'm trying to build a b2b marketplace, and wanted to build my "marketplace of dreams" (if I built it, they will come). I didn't address SEO or getting initial traffic because that was low brow, and would take care of itself if I built a cool enough product.

Boy was I wrong. That was a long (2+ year) lesson to learn.

HN has a tendency to hate on a lot of things that are wildly successful.

I think the accusation is that it is somehow a "low brow" startup.

See NY Mag's approval matrix: http://nymag.com/arts/all/approvalmatrix/71237/

All I can say is wow, they scaled super fast (scaled real people), and thats not easy

In last fall's First Look Forum in Seattle, two of the five finalists (including the eventual winner Grocery Cart Savings) had good data on the problems merchants have with Groupon. Of course Groupon's aware of those too and may well have improved things since then, but the discontent is very real.

If that is right - and it's totally possible - isn't this a fundamental flaw with the business model for all competitors too?

The only horror stories I can remember are that Mimi's coffee in Portland (?) and the Japanese new year. I've heard other second- and third-hand reports with no names or specifics. The "merchant horror stories" don't pass the sniff test for me - it seems like the same one or two brought up over and over again. It just seems like a fake news trend.

Andrew Mason said at startup school that the merchant satisfaction numbers are something like 95%. I

For what it's worth, I talked to a yoga studio owner who had a horrible experience (with Living Social, not Groupon). It turns out that people looking for a cheap deal on yoga classes aren't good long-term customers so the loss never paid off. I agree that we've only heard horror stories, but I'd be curious if there are small business success stories or is the service only good for big companies who can take the loss?

Despite being super-hot right now, deal sites are still just a customer acquisition tool. Best Buy could flood their stores tomorrow by advertising 90% off plasma TVs. Small businesses don't have the same level of experience and sophistication around customer lifetime value, so they're more likely to make mistakes like that. One of the services that Groupon provides (no idea about LS or other deal sites) is deal shaping/sizing, to help merchants offer deals that will not be super-costly or overwhelming to the merchant while still be appealing to customers. The Japanese new year incident (http://news.ycombinator.com/item?id=2111609) describes this in more detail. I think even the anecdotes will become more and more infrequent as merchants and deal sites get better at this.

the only one "coupon" I ever bought was for a $20 Amazon Gift card for $10 on Living Social.

All those other coupons are almost always junk. The only reason it works, is that out of millions of people out there, there are a few for whom that one coupon was actually relevant.

So essentially you sign up for 364 days of worthless spam, to save $10 once a year

Agreed, I only bought the $20 Amazon deal at Living Social since it's a guaranteed $10 savings at a company I frequent. Even then, I was hesitant to pull the trigger because I had to go through the registration process and opt-in to spam.

While it's not my concern, I don't see how some of these deals by large, nationally recognized companies (ex: Gap, Amazon, B&N) would be sustainable. I'm sure they can charge it to marketing, but they're increasing sales by offering a substantial discount that makes them lose money on short term, small transactions. I assume they hope 1.) new customers are attracted, 2.) customers spend much more than $20, or 3.) customers who don't normally visit are attracted.

I think that a lot of people are very happy to be spammed in return for saving money.

I wonder how much the average Groupon user actually saves in a month/year. I just glanced through the last three month of groupon spam in my inbox and the only deal that I would be remotely interested in was $6 off at some pizza place I don't normally order from.

It almost certainly works out that if you are a Groupon customer you spend more money than you typically would - in your lifespan of Groupon. Whilst you save money on the first purchase, would you have bought it at all if not for Groupon? What about future purchases? You probably wouldn't have ever considered Balloon lessons if not for Groupon...

I don't think in general coupons are a good deal for people. It is mostly clueless people who fall for it. As JoelOnSoftware wrote somewhere, collecting coupons is like working for 7$/hour. With Groupon, even if you save 50% on your Sushi, maybe you spend 2 hours getting to that Sushi place, rather than 5 minutes to the one around the corner.

However, there seems to be an infinite supply of clueless people, so the whole thing might still sail on forever.

If your goal is saving money, that's true.

However, much of Groupon's appeal is the incentive to try new restaurants or do new things. The sushi place around the corner may be good, but you're probably not going to remember your nth visit.

You've got a point. In fact with the right context aware notifications, maybe Coupons are OK - like if you wanted to buy X anyway and you automatically save money.

Then again if it worked that way, there would be no incentive for businesses to offer coupons...

Today's Groupon deal for my area is a $40 oil change for $20.

Whoop-de-freaking do. Every third day or so, I get a flyer with that coupon and about a hundred other offers, which pile up in my recycling pile.

When Groupon was younger, they ran more 90% deals, if I recall correctly. One way or another now Groupon is a company that offers me a small number of utterly pedestrian coupons a day, while I'm barraged with them in my snail mail. Presumably the 90% off approach where the offers were actually special doesn't scale. If the offers scaled, the businesses would already have been offering them through the existing coupon channels.

Oh, and I'm about 50 miles from the closest Groupon hub; my physical mailbox offers me coupons for things way closer than that, some of which I can walk to.

How does offering me an inferior selection of time-bound coupons that is beaten by my physical mailbox most every day make 6 billion dollars worth of sense‽ Groupon didn't create the idea of coupons themselves!

no one can deny what groupon has accomplished to date. you have to give them props.

as is, they have first-mover advantage (at least in terms of the group discount space taking off). i know i completely abandoned groupon in favor of scoutmob, which requires no money down.

i wrote a post similar to mark's why i believe groupon can't keep this up: http://adamwexler.wordpress.com/2011/02/09/groupon-is-about-...

interesting thing to note....although the general consensus is groupon passed on google, i've heard from a reputable source that it was the other way around, and google backed out of the deal.

I agree with your statements, but I have a question.

If I am getting a groupon that gives me 50% off $100, and I actually spent the $50 of which groupon takes ~50%... at what point don't retailers start offering "groupon like rates" directly to me, cutting out groupon?

Sure, many retailers will be too lazy due to the distribution groupon has - but won't there surely be this group of retailers?

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