Ask HN: How does Groupon make money?

3 points

7 years ago

I'm having trouble understanding how Groupon generates net profit? From what I've read, its sort of like a Group Buying model (https://en.wikipedia.org/wiki/Group_buying) ?

So for example, if Suzy Wong's Chinese Restaurant gets 50 new customers from Groupon, which side is taking the risk here, is it not the restaurant? What if all 50 customers don't show up and end up cancelling, is the restaurant stuck with the extra bill of materials in anticipation of a surge in new customers?

What happens when those 50 customers don't end up coming back, again, who benefits here?

Seems to me this is a careful balance of satisfying consumers & business owners needs while also watching for Groupon's bottom line?

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