By Dan Slagen
Groupon is an online marketplace that connects businesses with consumers. The site provides local deals for customers, offering significant discounts to those who purchase suggested products and services.
Customers sign up for Groupon in hopes of scoring good deals in their area. Those who sign up receive regular emails and smartphone notifications detailing the best deals of the day. Members can also conduct their own searches, based on the industry and location. If customers are interested in the site’s featured deals, they can purchase them directly, instead of negotiating with the seller. The purchaser then receives a coupon, which they can print and redeem with the seller. The company takes a portion of the money from the transaction by acting as an advertiser, promoter, and broker of the deal.
Businesses sign up for Groupon in hopes of attracting new customers. They are promised a certain number of sales every day. If Groupon fails to deliver the promised quota, the business does not have to pay a commission. If, however, the company delivers the agreed-upon quota or exceeds it, the business must pay a commission and offer consumers significant discounts.
Types of Businesses
The service is very popular with small businesses seeking to build a positive reputation in the local community. Through marketing on Groupon, these businesses are often able to build goodwill among prospective customers. Larger businesses such as Hilton also use Groupon and may build a network of deals across several regions.
A range of industries are represented on the website. Restaurants, hotels, and tourist attractions especially favor the digital marketplace; a popular example is the famed Skydeck at Willis Tower in Chicago. Other merchant categories include:
- Culture, Activities and Events
- Home and Auto
- Goods and Retail
- Spas, Salons, and Fitness
Groupon offers a variety of marketing services, some of which can be used by businesses that do not offer discount deals. These services are designed to increase merchants’ online visibility and drive conversions. Popular services include Groupon Pages, Local Deals, and Groupon To Go.
Groupon Pages allows businesses to present themselves in the best light while showcasing their products and services. These pages can be customized with detailed business descriptions and professional photos. Proponents believe that this service provides a search optimized means of attracting attention, while also validating represented business’ information and encouraging positive customer feedback.
Local Deals drives traffic in exchange for a commission and discounts for new customers. There is no upfront cost, but rather, a marketing fee based on the type of business, the industry, and the size of the targeted market. Deals vary significantly from one business to the next, but typically involve listing the product or service at a price significantly lower than would typically be expected.
Groupon To Go
Groupon To Go is a delivery service currently available in limited regions. Customers who utilize Groupon To Go can order meals online or via the mobile app, using available discounts to score significant savings. Meals are then delivered to the customer’s home.
Many small businesses use the service to build brand awareness. The site sold its billionth coupon in early 2016. Although not viable for all industries, the service can drive significant traffic for small businesses in the hospitality, retail, and home improvement sectors.