How Groupon Business Happens

By Author: Sandeep Thakur
Total Articles: 25
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“Merchants give discounts; they are pitched by Groupon buying sites; sales are made and everyone lives happily ever after.”
This is how most people decipher the business model of Groupon but it is not as simple as it seems. There are a number of steps involved and every step has its own importance. One hitch and expected profit comes as unexpected loss. Hence, understanding Groupon model is crucial before drawing conclusions. So, here is a better explanation of what really happens.
(Please note that the process, more or less, applies for Groupon clones as well)
Joining Hands
The first step involved in bringing alive a deal is an understanding between merchant and Living Social Deals site. Sometimes, a merchant himself approaches a coupon company with which he wishes to pitch his products and sometimes representatives or sales or customer executives come in touch. One mostly doesn’t enter in a commitment with just one company and rather likes to gain advantage from the mailing lists of different firms. Groupon is surely the giant in the town but there are many clones also ...
... with respectable amount of sender’s base. Once terms and conditions are decided in this step, process moves ahead.
Sketching the Deal
Hanging a 20% sale signboard outside one’s store and offering a discount though Groupon software are entirely different things. While no technical aspects are involved in prior other than figuring out how much you would be making at the end of the day, there are a lot of technicalities involved in the latter. Such technicalities could be how much discount to offer, minimum coupon-purchases required to make the deal active, framing restrictions on redemption on some specific days (popular in case on restaurants) and many other points. However, technicalities are totally deal sensitive.
When Deal Goes Live
As aforementioned, Groupon like companies have large senders lists and when an attractive deal hits the servers, there is a lot of activity for the initial two or three weeks. To treat such a large inflow, merchants need to be prepared with extra manpower or resources at hand if there is requirement of the same. Daily deals companies have learnt from their experiences and nowadays help merchants in dealing with the situation to enhance customer experience. If the planning part is flawless, there are very less chances of merchants being taken by surprise.
Redemptions
Redemption is an important part for merchants as well as customers. Former needs to keep track of how many coupons have been redeemed to know about the effectiveness of the deal. It is also important to keep a check on fraudulent activities based on coupons. Some companies offer special redemption-tracking services to merchants to let them have better control. Redemption through scanning and mobile apps is also widely popular.
While Players like Groupon and LivingSocial are the behemoths of the field, a number of entrepreneurs are experimenting with deal-of-the-day concept with their own platforms. Hence, the business of group script clone is booming with people scouring the web for deals that could save them