Creating online businesses is a valid way to generate income. In order to help get people inspired, I've been writing an article series focusing on different online business models. Here are links to my previous articles in the series: 'Diversify your income, create an online business' and 'Offer a Service online to earn additional income.'

In this article, I want to take a look at the extremely popular Groupon concept. Groupon, a mix of the words 'group' and 'coupon' hints that the idea behind this social media driven ecommerce site is buying in bulk to offer cheaper prices. The idea is certainly not new, we see it at the grocery store, in manufacturing, in wholesale and now it's in play online.

The Groupon site, http://www.groupon.com is a social network/ecommerce site where deals are offered on services to a limited amount of users in a specific period of time. If not enough users buy into the deal within the alloted time, the deal doesn't go through and no one is charged.

Users first sign up for Groupon's daily offers in their geographic area and they receive a daily email presenting offers for them. The user joins a given offer. A timer on the offer lets people know how much time is left to join in. Users are encouraged to forward offers to others in order to fulfill the offer membership. Enough people join in by the end of the timer and everyone is charged and issued a coupon to receive the deal they have purchased. Users enjoy huge discounts of 50-70% off on services and businesses enjoy exposure and revenue.

The Groupon concept follows the idea of power in numbers and focuses on targeting local markets with both users and businesses benefiting. The original american site was created in November 2008 and is said by TechCrunch to be worth 1.35 billion dollars. As a highly successful concept, there are many competing versions around the world. It's interesting to note that there are some 20 odd Groupon type sites in Israel and one such version called Grouper was recently sold to the American Groupon Site for 15 million dollars after just one year of operations.

So what does this all mean to you? The Groupon concept is an easy one to adapt to just about any product, service or industry. Not long ago I was approached by an interested party who was investigating using this business model to market vacations. The concept is simple and appealing to all sides involved however a site following the Groupon model does require a lot of management. There will have to be a team administrating the activities behind the site operations and development: searching and negotiating deals to offer on the site, managing the business, customer service, etc.

So the Groupon business model for a website – a great idea for those prepared to manage it.