

As Groupon Grows, So Does the Small Business Backlash - imkevingao
http://www.allbusiness.com/marketing-advertising/sales-promotions-retail-coupons/15374196-1.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+rss/2471213+(AllBusiness.com+-+Home+Page+Top+Stories)&utm_content=Google+Feedfetcher

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imkevingao
Ultimately I feel Groupon's model is flawed. Local businesses need to build
loyal relationships with the customers. Using Groupon makes local businesses
reveal their hidden card, which is their cost of doing business. If local
people realize that this local company can still make some profit after taking
this much reduction in price, how will they react to the current price that
the local business is setting?

In addition, the profit margins low, and the enormous flow of sudden customer
attraction compromises the quality of service. Unless the local business is
far superior than all of its competitors, I doubt Groupon will create much
value for the business. With the current business model, customers walk away
happy, Groupon walks away happy with a 2 year existence and already valuation
of 5 billion ( I would say happy as well) , but the local businesses are left
with disappointment, like the unsatisfied wife after the husband's premature
ejaculation.

