The central concept here -- a transaction triggers when a threshold of participants is met -- is bigger than group coupons. It's a sort of "Group Transactional Economics" by analogy to the atomicity of db or stm transactions. I think it could eliminate a lot of the risk and inefficiency dealt with by independent makers of all stripes.
The central concept is incredible but the way groupon uses it is not, the spa did not book over $4300 in business like Chris says, rumor has it that groupon actually takes 50% of the sales for itself. Sure, Groupon is a good business but its borderline abusive to its partner businesses (something that would not work if applied to independent makers).
Well, Groupon is the least interesting manifestation of the idea. I'm interested in two other takes on the idea: group purchasing collectives on the consumer side, and limited editions on the maker side.
Could you elaborate on your claim of abusiveness? I'm not sure such an unsourced rumor is sufficient evidence, nor am I aware of Groupon having such Walmartian clout that it can bully vendors into deals. Surely the spa signed its own end of the contract?
This is 10 years old! Letsbuyit ran this model in the dot-com hysteria but obviously blew up before they could prove it would make money (no doubt they got someone like Oliver Stone to direct their TV ads or something).
I think that the "threshold" is really a red herring. Having followed the site for a few weeks at this point, I would suspect that pretty much every deal "tips".
The actual effects of having a threshold are twofold:
1) First of all, it encourages people to tell their friends to participate
2) It creates the illusion of a group discount where none exists. A big discount might tarnish a business' reputation, but if there is a "group discount," people understand. When you think about it, there is actually no economy of scale about a business offering several hundred coupons valid for a six-month window.
I agree, it's a marketing stunt. There are no economies of scale at work here. Now, if I made it for an event, and I only booked the event venue and hired the entertainment / wait staff if the threshold tickets were purchased, than there's genuine utility here. But for miscellaneous products/services that I offer daily anyway, this is just a marketing stunt.
I worked at a consulting firm on a flameout .com (actbig) business that had a nearly identical model back in the late 90s; the big difference here seems to be the (smart!) focus on local businesses & services rather than generic goods like electronics and furniture, and offering only one deal at per day (rather wootlike).
I think the answer to the the question I asked then might be "yes." :)
(They still have a ways to go for profitability, though... 40 people on staff while the items are usually under $100 and have less than 1000 purchasers. Still, they've made it much further than my old client did.)
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[ 3.3 ms ] story [ 53.3 ms ] threadhttp://www.marginalrevolution.com/marginalrevolution/2005/05...
http://en.wikipedia.org/wiki/Assurance_contract
A system that was (theoretically) better at funding public goods than taxation would compete in some rather large markets.
The actual effects of having a threshold are twofold: 1) First of all, it encourages people to tell their friends to participate 2) It creates the illusion of a group discount where none exists. A big discount might tarnish a business' reputation, but if there is a "group discount," people understand. When you think about it, there is actually no economy of scale about a business offering several hundred coupons valid for a six-month window.
It's brilliant marketing, though.
Last time this happened: http://news.ycombinator.com/item?id=692644
I think the answer to the the question I asked then might be "yes." :)
(They still have a ways to go for profitability, though... 40 people on staff while the items are usually under $100 and have less than 1000 purchasers. Still, they've made it much further than my old client did.)
(Yup, I worked on that one too, although very briefly.)