www.watoday.com.au/technology/the-thrilling-demise-of-groupon-20120817-24dlq.html

(It's Phil) and no sarcasm here I am genuinely interested in business topics that affect small business. I always thought about these companies that surely they would just encourage somebody to set up a front business, take the first payment or 2 then disappear.

I do love how quickly things change in this digital age.

Very interesting, I have often seen these deals and wondered how such a thing could ever be viable for a business. For example I've seen scuba certs. being advertised for $150 - I know that registration alone is $99 per diver, add on top of that course materials and instruction and it just doesn't make sense.

Surely the only attraction is if there is a sufficiently high non redemption rate?

Apparently it can work for some businesses

ozreport.com/1288625440

My business sells electronic goods. It is well established and has been retailing goods for 15 years now. My market is super competitive so I decided to give them a go. Whilst it did generate incremental sales, it came with a whole host of new problems. The average failure rate in my business is about 0.05%. These customers had a failure rate of 3.8%..... WTF... They were constantly demanding services and accessories at heavily discounted prices. They were very difficult to please and are still a pain in the a#* to be honest. I don't think any of these customers will ever end up being a loyal customer, and we are talking north of 1500 of them. They took almost 50% of the very small margin I made and then it took me 2 months to get my money. Not worth the effort with the type of customer they deliver.

Yeah, I suppose repeat business could have some sense to it. There have been a few scams I've heard about.

As for groupon and co. low fixed cost of setting up, broad reach - textbook opportunity for market entry and profit dissolution.