"Group buying" or "collective buying" is a well known method for people to obtain better deals from merchants and service providers by joining up into a group large enough to qualify for the wholesale price.
In 2009 Groupon added new twist to the collective buying concept. The ingenious idea is to channel the "collective buying power" and employ it as a marketing tool. While buyers get huge ("unbeatable") discounts, this is only a tip of the iceberg. Groupon deals are not for sales boost, it's all about getting new customers to merchant – a new way of advertising.
Merchants rarely make money from the deals featured on a group buying site, because of the discount and website commission. For merchants it is an advertising expense, a direct investment into getting guaranteed new customers. Sure enough, merchants expect that coupon-bearing newcomers will eventually become repeat customers and generate a lot of new business.
Getsocio makes it easy for anyone to build a group buying site.