Groupon Discount

The Groupon Phenomena Explained by NPR’s Planet Money

by Scott Hoffman on May 17, 2011

I came across this great podcast that talks about Groupon‘s business model and how it effects the businesses that are using the Group Discounting product. The Podcast explains the Group buying services models, like Living Social and Gilt Group. One of the better quotes in the Podcast is:

But the new coupon craze has a huge downside. It took 100 years for paper coupons to overwhelm consumers. In just two years, there are now more than 400 daily deal sites. Businesses report getting calls every day from another Groupon competitor.

The full podcast is below, you can listen by hitting the play button on the left side, or you can down load the full episode and take it on the go.

NPR’s Planet Money: Groupon! Monty Python! Price Discrimination!

I really enjoyed this podcast. The segment with the professor who had a bad restaurant experience brought to mind another modern phenomenon in the internet world: the “Slashdot effect“, wherein a small website gets overrun with traffic when they get linked from a popular news site like Slashdot or Digg. I can imagine the net result of the “Groupon effect” being similar — a small business risks turning off many potential customers if they are unprepared for the influx of traffic that Groupon brings.

Visit NPR’s Planet Money Blog, it is one of my favorite sources of thought provoking information on the web.

3 thoughts on “The Groupon Phenomena Explained by NPR’s Planet Money”

  1. BarterMan

    From everything I can tell, they have no idea if they think that Groupon is good for business or bad for business.  The whole thing comes down to repeat customers.  If you made loyal customers, it was a fabulous thing.  If you simply served a slew of coupon cutters at a discount price, it was a lot of work for nothing.  

  2. Scott Hoffman Post author

    Hey Barter Man aka Kevin – I think your right – results will vary by type of business, type of offer, and repeat business. I wish I owned a small business to test it! Hmmm, do I know anybody like that? 🙂

  3. scotthoffman

    BarterMan AKA Kevin – I think that this Group buying concept is a hit or miss – I have read that almost 1/2 of all businesses that try this tactic do not do it again. That being said, that also means that 1/2 of the businesses did get some value out of it. It is my belief that results will vary tremendously by business type, if you made “a loyal customer” via trial, and how the business executes against the volume of trail users/purchasers that may come their way.

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