Thoughts from a Quirky Llama

Here's my Grand Unified Theory of GroupOn (GUTOGON): GroupOn is at heart a coupon site. They've done 2 things to separate themselves from normal coupon sites: Pre-purchasing & Very short-deal duration. This model has helped preserve retailer margins by preventing widespread use of coupons by casual customers. It's also a good model for forcing customers to make "mistakes" (i.e pre-purchasing deals they will not really want/use). Over the long-term though, it's a very customer-hostile model. There are very few business which try to force a pre-purchase model, and when they do it reflects the underlying business reality where capacity is limited (such as a non-refundable plane ticket). Even a single "bad" experience where a coupon goes unused, will tend to turn customers away as people remember bad experiences more strongly than good ones. I think GroupOn has also done a few things which have helped them but are not sustainable. First, the co...