Groupon: What It Is and How It Works

Get local deals and daily discounts from your computer or phone

Groupon is a service that can save you money through the use of virtual coupons. Much like a physical coupon book, you can use Groupon to get deals of up to 70% off of all sorts of things, from food and retail products to travel and services.

When you use Groupon, you can see local deals as well as deals from any location you search for. You can use Groupon on a computer and from a phone or tablet.

Illustration of three people looking at a smartphone with rainbows coming out of it and many "Groupon $$$" coupons floating around the image
Lifewire / Tim Liedtke

How to Get Groupon

Sign up for Groupon through their website at Groupon.com. Groupon is also available on mobile devices. You can get Groupon for iOS or grab the Groupon Android app.

Use your email address to sign up for Groupon or log in with your Facebook or Google account to speed up the sign-up process. If you plan to use Groupon on your phone and computer, log in to both with the same account. For example, if you log in to Groupon with Facebook on your phone, do the same on your computer to access the same account.

Screenshot of Groupon login page

What You Can Do With Groupon

Many types of coupons are available with Groupon, and coupons are easy to find on the website and the app.

Coupons are separated into categories like electronics, toys, entertainment, fashion, pet supplies, and more, as well as by companies like Amazon, Hotels.com, Target, Vistaprint, Nike, American Eagle, Walmart, and Shutterfly. Go to any category to see which coupons are available for that category type or from that company.

Screenshot of coupons on Groupon

If you're near a store where Groupon can help you save money, the app notifies you about the deal so that you can get a virtual voucher before you make the purchase. If you're on a computer, Groupon might direct you to the company's coupon page where you can print coupons to take to the store with you.

Another way to find local deals from your phone is to browse the Groupon app from the local section. This way, the only coupons you see are for deals near you. You can filter the results by distance from your location and price.

Groupon also has a Deals of the Day page that updates every 24 hours with fresh, limited-time deals. In addition to the daily deals, getaway deals offer savings on travel expenses when you book through Groupon. You can buy these deals directly from Groupon from your phone or computer.

Screenshot of Groupon Deals of the Day

Other features you get with Groupon include:

  • Email alerts notify you of new coupons from your favorite stores.
  • Groupon Bucks on qualifying purchases to get more discounts in the future.
  • Things To Do to find events near you that are cheaper with Groupon, and filter the results by category (like nightlife, tickets and events, sports and outdoors, and kids' activities) or by price or location.
  • Groupon deals on an interactive map that shows the deals displayed in your city for an easier-to-see selection.
  • Add items to your wishlist to decide later whether to purchase those items.
  • Promote your business on Groupon with Groupon Merchant.
  • Earn cash back at your favorite restaurants with Groupon+.
  • On occasion, there's an extra 20% off area of the website where you can find more discounts. These deals are usually limited to a few local deals and are only valid seasonally.
  • Groupon Gift Shop is an easy way to find specifically priced gifts for men, women, kids, and babies.
  • Gift cards for use at Groupon.
  • Become a Groupon affiliate partner to earn money by promoting deals.
  • A 30-day money-back guarantee for goods purchased through Groupon.
  • Students get 25% off local deals for six months, and then 15% discounts for as long as they're students.

Groupon's Purchase Options

When you use a coupon code at Groupon, there isn't a purchase you have to make through the Groupon website because all you do is copy the coupon code and use it on the website in question. However, if you buy something through Groupon, there are multiple ways to pay.

If you use Groupon through the iPhone app, there are three ways to pay: with a debit or credit card, PayPal, or Apple Pay. However, with some services you buy through Groupon, the only option you have is Apple Pay. Android users can pay with PayPal or a card.

How Does Groupon Benefit From Deals?

Since Groupon is a middleman service that promotes restaurants and stores, in return from the company they're promoting, they earn a commission each time they successfully refer a customer.

Why Is Groupon So Popular?

Groupon is popular for two reasons. First, Groupon users are modern consumers who love to spend money. They especially love to buy when they get a discount or a perceived bargain. Groupon works because it provides tempting choices for its motivated group of consumers.

Second, Groupon can easily become viral, and its daily discounts spread quickly through email. Groupon subscribers like to forward daily deals to their friends, and in a world of social media and online personal suggestions, an email suggestion carries influence.

Groupon subscribers receive a $10 incentive to refer friends, so it makes sense for users to be motivated to spread the word about Groupon and encourage people to take advantage of the deals.

Is There a Catch With Groupon?

The only catch is the time-limited nature of the Groupon discounts. With some deals, once a deal is announced and posted on the site, it's relevant for 24 to 72 hours, after which the discount is no longer available.

Screenshot of Groupon deal ending soon

Coupons, on the other hand, are commonly valid for six to 12 months after you purchase, so there's no rush to redeem the coupon the same day. However, coupons expire at some point, so the coupons you see on Groupon won't be there forever.

Like any form of sales, the provider wants to make it urgent for the customer to purchase, so when you see a Groupon deal that interests you, jump on it within a couple of days.

See Groupon alternatives for other ways to save money.