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.
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.