Groupon features a daily deal on the best stuff to do, see, eat, and buy in a variety of cities across the United States and has been recently featured on the Today Show, Good Morning America, and named the #1 Hottest Website for 2010 by Fox Business News!
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Find Great Deals on Fun Things to Do

When Philz Coffee Inc. offered half-price $20 gift cards to users of the Groupon.com coupon site, the San Francisco chain of coffee shops figured it would get a few hundred takers. It got more than 2,000."I nowhere near projected the amount of people that showed up," said Philz President Jacob Jaber, who doesn't expect to offer that kind of deal again. "We ran out of gift cards, and we just weren't prepared for it."Philz' plight spotlights a challenge facing Groupon.com, which offers a daily deal in more than 140 cities. The site's coupon-wielding hordes can overwhelm small businesses, rankling partners and customers alike. Overcoming those glitches will be key to helping Groupon maintain growth, hang on to its $1.35 billion valuation and possibly move toward an initial public offering.Last month, the company received $135 million in funding from Digital Sky Technologies, the Russian investment firm that also owns a piece of Facebook Inc. Groupon is using the money to fuel growth. The company, which started in November 2008, aims to double its U.S. coverage to 100 cities this year.

Part of that effort is ensuring business partners aren't overrun with customers, said Chief Executive Officer Andrew Mason. The Chicago company is beefing up its consulting programs to help merchants handle the surge of new business and retain those customers. In the coming months, it plans to add online seminars on marketing and redesign its business site to better prepare small-business owners for sudden demand booms."It's not in anyone's interest if the merchant is so overwhelmed that they can't provide the service they're known for," Mason said. "We say to businesses, the first day is going to be crazy."When Groupon posts an offer on its site, it keeps 50 percent of the revenue that merchants get from the deal. Enough people have to sign up for the offer before it becomes valid, and businesses can set a limit on how much they want to sell.The trouble is, businesses often don't make the cut-off low enough. A nail salon in Boston sold 4,000 manicures and pedicures before Groupon discovered the shop had just two stations, Mason said.The risk is that users may turn around and sue Groupon, said Jeremiah Owyang, an analyst at Altimeter Group in San Mateo.