Business Essay: Groupon Model

What Is Flawed in the Groupon Model?

The business world is great in dimensions. There are different types of businesses where the owners do varying strategies to promote it and gain popularity. One of these strategies or programs is the so-called Groupon Model.

Traditionally, local merchants have tried to reach consumers and generate sales through a variety of methods, including the yellow pages, direct mail, newspaper, radio, television and online advertisements (“What Is Groupon Business”). Groupon connects and forms partnerships with businesses to offer vouchers, coupons, and discounts for products and services to help attract more customers (Hamilton). By bringing the brick and mortar world of local commerce onto the internet, Groupon is creating a new way for local merchants to attract customers and sell goods and services. Each day they emails they’re subscribers with discounted offers for goods and services that are targeted by location and personal preferences.

Groupon helps greatly in boosting sales and consumer traffic of businesses, but that is not always the case. There were instances that it causes more damage than good, like customer dissatisfaction and even profit loss.

Groupon Model is a really good way to attract customers because we all know that most of us love discounts, freebies, and bargains whether it’s for food, items or services. This can boost the business industry, but like all other business models, it has its own share of flaws. Over promise, under deliver is a core problem of Groupon. Whether it’s the sales representative misleading a small business owner or the small business owner completely misunderstanding that Groupon is only about marketing, expectations aren’t met either way and result in customer dissatisfaction.

It’s not their mission to offer consultation to small businesses, but they should. Groupon should not just focus on how to attract a mass of customers but on how to earn a lifetime customer. Another flaw of this model is that daily deal saturation has made it easy to ignore all emails regardless of their value. They should create a smarter algorithm that will truly cater to an individual. It is also not suitable for small businesses where they may spend more than they earn. Hence, it is an ideal model, but it’s not perfect.

Works Cited

Hamilton, Chris. “What Is the Groupon Model?” Small Business –,, 26 Oct. 2016,
The Groupon Business Model. Wealth Publishing, 2014.
“What Is Groupon Business Model?” VCCircle, 3 June 2011,

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