Groupons differ from traditional coupons in a few important ways. The first is inherent in the company’s name, a portmanteau of group and coupon. Groupon deals are only guaranteed once a minimum number have been purchased. The more people who buy, the better chance you have of scoring that deal. The minimum number needed to activate the coupon (called the “tipping point”) is listed on the deal page, so you can see how many have been purchased and how many more are required to reach the goal.
If a deal doesn’t garner enough interest by the time the clock runs down, no one gets the discount. Users’ cards aren’t charged until the tipping point is reached, so there’s no danger of losing money. But no one wants to see a good deal go down the drain.
This is where the social aspect comes in. By sharing the deal with your friends via Facebook, Twitter, or other social networks, you increase the chances of a Groupon deal hitting the tipping point.
Another difference is that users have to buy the Groupon value up front, instead of just getting the discount when they redeem the coupon. Essentially, you’re prepaying for whatever goods and services the coupon offers. The benefit is that this allows businesses to offer very deep discounts. However, every Groupon has an expiration date, just like regular coupons. Even though you’ve pre-paid, if you don’t redeem before the coupon expires, you’re out of that money.