Home topics small-business-resources sales-and-marketing Marketing Marketing Online group buying—what’s the big deal? Jennifer Blake May 31, 2011 Groupon launched quietly in Chicago in 2008, offering a one-day-only deal for half price pizzas from a local store. Its daily deal model changed the face of online marketing. In just 18 months, thousands of entrepreneurs have jumped on the bandwagon, launching daily deals to millions of bargain-hunting online consumers out for a good time or a cheap buy. The benefit to the consumer is obvious, but what can a small business get out of selling its product or service at a loss? Why jump on it? “The beauty of it is that it allows a business that’s never advertised before to hit markets and expand its business with virtually no risk and pretty low cost,” explains Adam Schwab, managing director of DEALS. Businesses can tap into collective consumer buying power and grow awareness of their business without a big financial outlay, says Patrick Schmidt, managing director of Groupon’s Australian subsidiary Stardeals. “If you don’t sell any vouchers you don’t pay anything to us. There’s no risk.” Don’t be fooled⎯it’s not no-cost advertising. You will pay commission on deals sold to the host site, and group buying isn’t about delivering profit. “We generally get our merchants to give away their profit on the first visit so they can get the customers in easily,” says Colin Fabig, CEO of Jump On It. “That extra revenue, that give up of profit, is usually wasted in