Having been a former retailer and current Public Relations person, I'd have to say:

1. The recipient of that e-mail may have the perception that they're getting a better deal than the average customer--and they ARE getting a better deal than the customer who didn't get the Groupon. And who doesn't love a great, legitimate bargain that no one else knows about?

2. The "Get it While it's Hot" factor--if you miss the deal, you miss it. In broadcasting, the "call to action" is what differentiates commercial stations from noncommercial ones, particularly in radio. You'll hear corporate sponsor names on NPR, but you'll never hear a commercial that gives prices.

3. I've noticed a lot of small businesses are using it...it's all local stuff, independent restaurants, stores, salons, etc. or local franchises of national chains--again small businesses. If you were a merchandise buyer for an independent, family o/o retail store (I was), you'd know that the discounts they give wouldn't put them out of business. Combine it with the advertising fee. Without the messy calculation, let's say the store only makes 50% of what they would have made. So they're still making some money--and it's better than none.

I'm willing to guess there's no actual group buying going on, it's just a discount voucher with a catchy name. They could wind up giving that discount to only one customer. It is entirely possible that the advertising/processing fee is built into that discount, so let's say a store is offering customers 50% off, they're actually giving 60% off, with that extra 10% being fees for the transaction, on top of a fee for the Groupon to be sent out. And the store is still making a good profit on that sale.

(This is pretty much how discount travel sites work--on the "an empty plane seat is an expensive plane seat" or "an empty hotel room is an expensive hotel room." They'd rather cover their operating costs than not make anything:

"Hotwire is a leading discount travel site that offers low prices you won't see anywhere else. How do we do it? We have special relationships with major travel providers to help them fill airline seats, hotel rooms, and rental cars that would otherwise go unsold, so our customers get them at prices lower than many other travel sites. And unlike other discount travel sites, our posted price model makes it easy for our customers to find a great deal without bidding or guessing. Travel value hunters have come to rely on us for the low prices from the industry’s most highly respected travel brands — deep discounts on last-minute, local, weekend, and leisure deals in fantastic destinations at extraordinary savings.".)

But what are the chances that while at the store, restaurant or salon you will a. buy something else you see there, b. return to buy something else if you like what you got or c. tell friends? Pretty good.

I'd imagine that's the appeal for businesses. That and Groupon has established itself and people know it, so consumers feel confident it's not a scam.

They are successful because their deals are great for food,attractions and shopping in your area. They have wonderful customer service. Businesses are saying that their phones are ringing off the hook. As long as those phones are ringing that keeps Groupon up and running. They love working with Groupon. Another thing that makes it work is that a person can refer a person to Groupon if they do they will receive $10. Its easy to use 1. check your email,Facebook or Twitter. 2. Pass along deals by email or social networks. 3. Print your voucher. Now how easy is that?

Because it's a win win! It gathers lots of small groups into a large enough group to cut a discount that helps all involved

because it is much moren cheap.

becuase it is well designed, and well written and well researched!

Because it gives you a cheap way of trying services without a large financial commitment.