Does this question intrigue you? – ‘How Does Groupon Work?’ If yes, this blog is the ultimate guide for you and your upcoming business venture.

Getting people together to achieve particular goals. This was the prime goal of The Point, a tipping-point-based website founded by Andrew Mason in 2007. Later on, Andrew Mason became the proud owner of Groupon and made the site what it is today. The birth of Groupon is thanks to The Point. Andrew Mason needed a website to provide whopping deals to businesses and enterprises. And that’s how Groupon started its journey.

And ever since its inception, Groupon has been in talks among the business personas. There have been some allegations regarding whether it’s real and not fake. You wouldn’t be the first to hear the question, “Is Groupon legit?” That said, let’s take a deep dive into the world of Groupon. From understanding What is Groupon to getting how does Groupon work?

What Is Groupon?

Before we get to know, what is Groupon? Let’s understand where the naming comes from and what it means. The name Groupon is a mix of the words “gathering” and “coupon”. References are from the organization’s viral marketing business model. The objective of a viral way to deal with marketing is to urge Groupon individuals to give marketing messages to different destinations and users, making a possibly remarkable development in the message’s perceivability and impact. Groupon’s deals are just presented for a specific measure of time – normally 24 hours. The discount coupon will possibly become dynamic if a pre-decided number of individuals focus on buying the advertised product or service.

Groupon is a marketing endeavor that offers its subscribers everyday discount coupons by email, Facebook, and Twitter channels. Regular Groupon deals center around nearby restaurants, stores, services, occasions, and local products. Today, there are 35 million enlisted Groupon users around the world.

When usr reaches the tipping point, the discount voucher opens up. One can print it as well. This is regardless of whether they are not Groupon individuals. If the tipping point isn’t reached, Groupon drops the deal. The first individuals who pursued the discounted purchase get their money back. The tipping point is there to guarantee that Groupon’s business partners get a settled upon several customers before focusing on the discount.

Eager to create your own Groupon-inspired app and boost your business? Let’s make it happen!

Groupon Business Model Canvas

In this Groupon Business Model, key resources, key activities, key partners, customer relationships, value propositions, channels, customer segments, cost structure, and revenue streams have been showcased.

Groupon Business Model Canvas

How does Groupon Work?

Groupon Business Model is exceptionally straightforward. It is made up to sell arrangements and rebate coupons to customers. Then it acquires 50% of the revenue as commissions for each customer referred to the merchant. Now, together, we will answer the question, “how does Groupon work?”

How does Groupon Work for the Customers?

Groupon is a free plan business focus that allows clients an opportunity to examine and get a good deal on things. The stage similarly works on clients’ contribution by using designated sees and tweaked messages, allowing them to save more on their buys.

Clients buy these plans and refunds as electronic coupons, which can be recuperated at the merchant’s site or updating zone. Groupon’s planned vested party integrates early adopters with significantly affluent and optional capital and metropolitan women with high-level training.

How does Groupon Work for Sellers?

Groupon passes more clients on to the brokers and charges them commissions for something similar.

Merchants’ advantage from uniting with Groupon as they get more clients, as well as details, express that around 78% of the clients implied by Groupon are likely to visit the transporter again.

The organization has worked with more than 1 million sellers to date.

1. Working Metrics

Groupon portrays endorsers as the aggregate number of individuals that have completed selection through a specific date, fewer individuals who have been removed. To consent to acknowledge the organization and transform into an ally, a singular gives an email address. Groupon can check our overall development in the market and our potential pay open entryway as a part of our aggregate endorser base. The ally base doesn’t consider the activity level of the endorser with our organization, nor does it modify for various or unused records. No matter what these inconveniences, Groupon trusts this metric gives a significant figuring out about the bearing and size of the business. Notwithstanding the way that by a wide margin the vast majority of our pay begins from allies, they furthermore pitch Groupons to clients that buy as guests and, subsequently, are prohibited in our aggregate endorser number.

2. Total Customers

We portray all our clients as the aggregate number of exceptional clients that have gained Groupons from January 1, 2009 (the fundamental date we began following stand-out clients) through a specific date. We view this metric as a basic marker of our business execution as it urges us to fathom the buying pace of our allies.

3. Featured Merchants

This metric addresses the aggregate number of transporters featured in a given day and age. For deals presented on a nation over the premise, we count the public seller once. For deals presented by public transporters for a close-by or regional reason, we consider the public seller an alternate merchant in each market wherein the game plan is promoted. We view this metric as a nice marker of development and a basic proportion of the sufficiency of our solutions and exhibiting structure.

How Does Groupon Make Money?

How Does Groupon Make Money

Groupon gives a connection between customers and businesses or merchants in the local market. As it is a broker among sellers and buyers, the wellspring of a large portion of its revenue is the foundation of that connection. All in all, the platform offers deals and discount coupons to customers.
At the point when that customer alludes to a merchant, the platform pockets some cash as a commission for giving that connection between the buyer and seller.

Remember that Groupon is a two-sided marketplace. The platform will advance businesses and merchants online, which assists them with getting more customers. Consequently, Groupon requests a commission from the business. As they accomplice up with local businesses there is a variety and assortment in the services and products you can get.

How about we separate the revenue hotspots for Groupon.

1. Offerings and Deals:

Coupons and vouchers are the greatest revenue generators for the business. Groupon gives offerings and deals from local sellers. Along these lines, customers can purchase merchandise at a marked-down cost, and the business will advance itself and increment its client base. The organization charges a commission for every sale. The offerings are isolated as follows

  • Local services : by the organization between Groupon local in addition to public merchants.
  • Products : both immediate and outsider sales
  • Travel : different traveling offers like hotel reservations, eateries, tickets, and so forth.

2. Direct Sales:

Albeit the organization has an organization with different sellers, it offers different products to online customers without including any outsiders at times.

3. Vouchers, Tickets, Coupons, and Card-connected Deals:

Vouchers and coupons are the greatest revenue generator for Groupon. The platform has now begun to zero in on card-connected deals to make the process smoother for customers.


So, there you have it. From understanding what is Groupon to get an in-depth analysis of how it works. This guide will help businesses in starting their own Groupon-like business. If you’re having any particular idea like Groupon hovering around, lucky for you – we have a perfect solution. Drop us a line, and we shall discuss it with you.


If you’re running an online business, the following are the advantages you can grab on:
High-volume Sales

As a service fee, Groupon gets 50%. Let’s assume that someone is running a beauty parlor, if the deal is generating $2000 in sales revenue, out of it, $1000 will go to the owner of the company, and $1000 will go to Groupon.

Groupon charges 50% of the sales revenue as its fee.

Groupon has numerous contenders that offer a comparative or contending product offering. What makes Groupon extraordinary is its prices and the kind of deals they offer. Groupon utilizes a huge sales force that effectively arranges deals from businesses for clients. Concerning the kind of deals on offer, the company has figured out how to effectively do a business given what customers need as opposed to what they need.

Paresh Sagar

Article By

Paresh Sagar

Paresh Sagar is the CEO of Excellent Webworld. He firmly believes in using technology to solve challenges. His dedication and attention to detail make him an expert in helping startups in different industries digitalize their businesses globally.