Though IPO investors disagree, I still think Groupon’s business model is suspect and market valuation is wacky.
Here’s the latest from the WSJ:
Rivals of Groupon are threatening the daily deal site leader by offering quicker payment to merchants, potentially jeopardizing a key part of the company’s business model.
Groupon, which offers online deals for local merchants, keeps itself in cash by collecting money immediately when it sells its daily coupons to consumers while dragging out payments to the merchants over 60 days.
For instance, a hair salon might run a deal offering $100 of services for just $50 on Groupon’s website, which then keeps as much as half of the total collected and sends the remainder to the salon in three installments about 25 to 30 days apart.
“You want to get paid in full as quickly as possible. We’re the ones that have to cover the cost of goods for giving away everything at half price,”
* * * * *
Groupon pays merchants in installments of 33% over a period of 60 days
LivingSocial pays merchants their full share in 15 days.
Amazon Local, pays immediately.
Google Offers promises 80% of the merchant’s cut within four days, and the remainder over 90 days.
Thanks to SMH for feeding the lead …
The Homa Files 
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