Why Groupon Is Poised For Collapse

Imagine you're a small business owner. You have to choose between two propositions:

1. You can pay $62,500 for marketing. You'll get a whole lot of customers coming through your door. No guarantees if they will ever come back, but they'll come once.
2. I'll pay you $21,000. You get $7,000 in about 5 days, another $7,000 in 30 days and the remainder in 60 days. In exchange, you'll give my customers cheap products for the next year.

Although they sound completely different, #1 and #2 are really the same?it's the Groupon business model.

Source: http://feedproxy.google.com/~r/Techcrunch/~3/HFS_JVi4Guc/

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