Over at Balloon Juice, Mistermix has a complaint about somebody waxing poetic about the virtues of Groupon:
Groupon sells coupons, not invisible condoms or no-hangover martinis. I have no doubt that Groupon can be quite profitable, but coupons have been around for a hundred years. Groupon competitors will spring up, just as they have in the real world. Retailers are going to get skeptical about whether coupon shoppers are potential return buyers or actual skinflint cheapskates, just as they have in the real world.
That’s not really a fair comparison. Traditional coupons are valued and printed on the basis that a certain percentage of them (I remember reading a while back that it was less than one in four) will be used, but have to account for the possibility that they will all be used, which is why most of them offer a relatively low rate of savings (usually about 12-20% of retail cost, although occasionally you get lucky and get a coupon for 20-30%).
Groupon, however, values its discounts on the basis that everyone who buys into it will use it and pays in advance for the privilege; it’s not a coupon so much as it is a floating group purchase rate in which anybody can participate, and most sellers working through Groupon are lowering their profit rate but not eliminating it entirely on the basis that selling more stuff to more people for less profit individually means more profit overall, especially if even a small fraction of them become return customers.
Groupon is simply more efficient than coupons for all parties involved, which is why the speaker’s sentiment – while florid – is reasonably accurate.