Shopping website Groupon has been on the radar at Website Magazine for quite a while. The service, which is now operational in 18 cities (and they just announced the addition of Nashville) is based on a rather interesting principle - collective buying.
Groupon negotiates deals with businesses (merchants). Subscribers to the Groupon service receive daily email alerts. What is unique and fulfills the collective buying principle is that deals are only "activated" if a minimum number of people agree to buy. Should subscribers really want the item/service in question, they are prone to share the "deal" with those in their social network (family and friends) through services like Facebook or Twitter.
While the viral-friendly aspect of Groupon will certainly appeal to merchants, the biggest selling point might just be that it is risk-free. Merchants pay only when the deal is "accepted" by the network, paying nothing to simply appear on Groupon and make an offer to members. Groupon collects money from participants upfront and sends a check based on campaign participation (the number of members who accepted the offer).
"Groupon brings buyers and sellers together in a fun and collaborative way," said Groupon founder Andrew Mason. "We offer the consumer a great deal they can't get anywhere else and deliver the sales directly to the merchant."
