Over the past few weeks several different people have asked me what I think of group buying sites such as ourdeal, scoopon, living social and cudo as a strategy for marketing small business. So, here’s what I think…

-Group buying sites are NOT a magic bullet
-Cashflow can become a problem, be prepared for it.
-It does not automatically generate repeat customers
-There will be paperwork… and lots of it
-Your customers will complain that the products were “oversold” with flowery copy
-Can your business cope with the influx?
-Are your margins high enough to accommodate the discounts and commissions?
-Negotiate with the company, don’t accept their first offer.

Make sure you run the numbers and then run them again. Is this actually worth your while? We spent some time looking at a proposal from a group buying site that would have left one of our readers without stock and not enough cash in the bank to replenish after the huge discount and the ridiculous commissions. Needless to say they didn’t participate.

A word of warning if you do, make sure you offer your customers the same great products and services you normally would… the last thing you need is a PR nightmare on your hands!