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Fixing Daily Deal Sites

By Mike Schneider

Since filing their S-1 ahead of their potential IPO, Groupon scrutiny has been intense. More and more, sales costs are rising and subscribers are buying fewer Groupons. Meanwhile, the company needs cash to keep ahead of its mounting expenses; one journalist compared Groupon’s model to a Ponzi scheme because the company is using the float from new deals to pay off merchants from previous deals. If they keep going in this direction, many feel that Groupon will run out of cash and be unable to pay merchants who have run deal programs.