It's Cool to Use Coupons - $100,000 Dollars Cool!

From my grandmother who got excited when the dollar store had a sale to my penny-pinching dad who spends endless hours on slickdeals and fatwallet, being cheap runs in my family. So when the concept of collective buying started gaining popularity due to Groupon's 30 million dollar backing, I became highly intrigued.

The concept of Groupon's collective buying is shear genius - both for the businesses and the consumers. First consumers receive incredible deals as discounts of 50% and higher from retailers who normally don't even offer coupons. From teeth whitening, skydiving, restaurants, massage therapists and more, Groupon offers one coupon a day by city as well as a daily side deal. The main coupon must receive so many purchases to "be activated" which means now everyone who buys the coupon will receive it. If the coupon doesn't receive the required minimum number of purchases (this is highly unlikely with their 2.2 million subscribers across 30+ cities), then no one gets the deal. Most of the Groupon coupons tip within the hour of their release.  Also, consumers pay for the coupon upfront, so businesses not only know how many people downloaded the coupons but also make instant revenue.

From a financial standpoint Groupon only takes a cut of the earnings, so there is no upfront risk for the business and with daily purchases in cities of 300-1500, we can see why almost 97% of Groupon businesses want to have repeat coupons.  The way these companies are willing to offers such discounts is the overnight exposure and income Groupon can offer through its large user base.  Especially in our current economy, discounting is big business!

I hope you are sitting down because it gets even better. Now Groupon is running a promotion "Live Off Groupon" where one lucky winner will attempt to live off Groupons for an entire year. If the person selected is successful, he/she will win $100,000! If you haven't heard about this already, I'm sure you will because these types of promos go viral like gossip through a sorority house.

Now companies you may hear less about with a similar concept to Groupon are sprouting up.  The old adage that great ideas spawn copies definitely holds true in collective buying.  Now not all of these are exact replicates to Groupon but share very similar styles of deals: livingsocial.com, groopswoop.com, townhog.com, homerun.com, youswoop.com, wegivetoget.com, mydailythread.com, twobuckduck.com, couponfield.com, and a non location based daily coupons at deals.yahoo.com and woot.com.

So where does Groupon go from here?  Future plans for Groupon include rolling out to a total of 80 cities by the end of 2010 and we will see how large this industry will grow.