The scalability of the Groupon model

If this sort of dissatisfaction is pervasive, I’m afraid it looks like the Groupon model is not so scalable.  This isn’t even considering the competitive issues or even the pro-deflationary business model.

According to Dholakia’s data, Groupon promotions were unprofitable for 32 percent of the businesses surveyed and over 40 percent of those businesses indicated they would not run a comparable promotion again. (The study found that businesses with unprofitable promotions reported low rates of spending by users beyond the Groupon’s face value as well as low rates of return at full price.)

via Study: Groupon Unprofitable for a Third of Businesses | ClickZ.

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