Avoiding The Pitfalls With Groupon

A recent blog post and a study by Rice University show that social couponing services can actually cost small businesses money if they're not careful.

"The Groupon coupon service is hot right now -- not only with customers who love getting deep discounts, but also with businesses looking to appeal to the site's vast database of potential clients.

Groupon and other social-coupon sites (such as BuyWithMe, LivingSocial, SocialBuy, and Tippr) offer deals with a catch: For a deal to become valid, a certain number of people must first purchase it. That way, Groupon makes a certain amount of money, businesses are guaranteed a certain number of customers, and customers get deep discounts. Supposedly it's a win-win-win situation."