I won't lie, when I came late to GroupOn craze less than a year ago, I was somewhat seduced by the allure of bargain prices for interesting activities. Activities that got me up and away from my laptop and iPhone screens (Holy shit, my wife loves anything to get me away from my gadgets).
After a short while I started to do crude math in my head to understand the longterm viability of sites like GroupOn and Living Social. My own skepticism brought to mind questions my boss used to drill us with at my first job out of college (circa '99). This was during the dot-com boom. He would watch us oogle over dozens of amazing interactive sites for products and services and ask, "So how do these guys make any money?"
We would just shrug our shoulders and say we didn't know.
We now know, of course, how that story ended for many businesses.
Now it seems, the true colors of coupon sites are coming out. The New York Times says these sites are not a great for some merchants:
Some entrepreneurs are questioning the entire premise of the industry. Jasper Malcolmson, co-founder of the deal site Bloomspot, compares the basic deal offer with lenders' marketing subprime loans during the housing boom.
"They were giving these mortgages to every consumer regardless of whether he could handle it," Mr. Malcolmson said. "But sooner or later you find that you can't make great offers to people if they're not making you money." He recently revamped Bloomspot to focus on merchant profitability.
There's no shortcut to success, and once you're successful, there's no guarantee you'll maintain it.
The advice for successing in any business is the same as optimizing your site for search engines.
Create original, relevant content repeatedly.
I'm not saying it's easy, but that's the recipe.
UPDATE: I should note a crucial ingredient to the success equation I left out. After you repeatedly create original, relevant content repeatedly, you don't give it away. Or sell it for a loss. You charge money for it.