Groupon- Not Cool for Merchants

Groupon is a social way to share coupons online. They negotiate deals with businesses and offer them to their subscribers with the promises that new, previously unreached customers will enjoy their experience and become regulars. One of the main problems is that the company is that they have no way to make sure their promises are held up and that they do not care what happens to the merchants after the daily deal is over. Some of the latest research by ForeSee shows that most of their income comes from a small number of people. This means that a few number of people will use Groupons very often, but they don't normally go back when they have to pay full price. These people are very frugal and are not likely to become regular customers. Also, people that would normally purchase items at full price from a merchant will go in with a Groupon which greatly reduces the merchant's overall revenue. This directly goes against the idea that it helps merchants and supports the local economy.
The social media aspect of Groupon puts unneeded pressure on consumers to purchase deals. Facebook and Twitter "friends" may pressure their followers to purchase unneeded Groupons and ultimately cause their followers to lose money if they never redeem their Groupon. Also, if news feeds are clogged up with advertisements and pleas to friends to purchase the Groupons they have invested money into, it could cause frustration. Sometimes "news feeds" can be so jammed with certain things, it is hard to actually use them for the purpose of seeing different status updates and tweets from more than just their avid Groupon-user friend.
Groupon is also a prefect example of hegemony. The  majority of the people using Groupon are more inclined to purchase those that have more purchases than others. A certain group of people that are regular Groupon users can use their purchasing power to lead others to believe that what they are buying is the right thing to buy. Groupon has a quota that makes sure a certain number of people buy each deal before the deal activates which contributes to the power of a small group of people to convince others that the deal they want is the interest that everyone should share, even if that interest is not actually shared. This can lead to a false sense of shared interests. (Storey, 79-80)
Overall, Groupon has many positive aspects that tend to outweigh the negative aspects for consumers. However, merchants tend to suffer and often regret their use of Groupon. For additional reading on the negative aspects of Groupon for merchants, please visit the reference links shown below.

Reference links:
What Daily Deal Companies Should Do to Help Merchants
10 Reasons Why Groupon is Terrible for Merchants
Groupon's Whale Problem

Video:
http://www.youtube.com/watch?v=b-WfiOGSAno