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E-coupons may not pay off for small businesses

Daily-deal electronic coupon websites have become a web phenomenon, attracting consumers and potential investors in droves. But the question remains whether e-coupon services are really beneficial to the small business owners providing the bargains.

The way these services work is simple enough. The sites offer one deal per day in each city in which they operate. Discounts are quite deep, usually between 40 and 60 per cent, but can sometimes be upwards of 90 per cent. If a preset number of people purchase the coupon, it becomes valid. The discount site takes a cut of the coupon sales (usually half), and the retailer keeps the rest, less any administrative fees.

Coverage of the latest small business news, trends and issues, as well as advice from experts on everything from starting and marketing a business, to managing staff and improving the bottom line.

Many coupon sites have quickly generated large followings of bargain hunters. In a May survey of more than 2,000 people by shopping site PriceGrabber, 44 per cent of respondents said they use or search daily deal websites.

That kind of potential customer base makes companies sit up and take notice. In late 2010, for example, Groupon (the leader in the e-coupon field), declined a $6 billion buyout from Google, and when it filed this summer for an initial public offering it was valued at between $15 and $30 billion US.

But rifts are starting to show in the e-coupon market as competition not just for consumers but also for businesses offering solid deals increases.

Read the full article here: E-coupons may not pay off for small businesses – Business – CBC News.

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