Groupon is a website that works with merchants across the country to offer unheard-of discounts to ordinary people. The discounts that Groupon offers can be up to 90% of the retail price and they have deals on everything from restaurants to entertainment and even plastic surgery.

While consumers love the deep discounts that Groupon can produce, many merchants are less than thrilled with the results they receive from using Groupon. The question is: is it because Groupon is a bad place to do business, or is it simply because merchants are unprepared? If you are considering using Groupon, you should know all the pros and cons before investing.

As with any other type of advertising, knowing all the pros and cons of using Groupon will help you determine whether you should use the website to promote your business or find alternative resources.

Take a look at the benefits first:

• Attract customers: You can really create a stir and attract new customers in large numbers using Groupon services. New customers get a great deal and hopefully become long-term customers if they lie about what your company has to offer.

• Great publicity: Increase the chance that you will not only get new customers, but also repeat customers. Groupon receives tons of visitors every day and every visitor is a potential new customer for your business.

• Move excess inventory: Groupon is perfect for unloading your stagnant inventory. Sometimes taking a little less money is better than getting nothing at all. Plus, you get the added benefit of getting your business name out there.

Of course, with the good comes the bad, and so here are the downsides that are generally associated with Groupon:

• Deals kill your brand: Those who look for deals are not going to be the ones who are loyal to any brand. Instead, their loyalty will be with the lowest price, and if it’s not you, they’ll probably look elsewhere.

• Deals can kill profits: Groupon will get 50% of what your deal generates, so low margin deals will wipe out your profits. In fact, you could end up losing a lot of money if you’re not careful. This is one of Groupon’s biggest complaints, but margins should be the first thing to consider before deciding to pull the trigger.

• Offers may not convertWhile you might think that offering deals will build a customer base, many say the opposite is true. According to some, customer conversion with Groupon is low because the types of people who search Groupon again are only looking for deals.

All of this is not to say that you should or shouldn’t use Groupon for your business, but it does suggest that you do your homework. Groupon is like any other way you would promote your business. If you do it the right way, you can guarantee a successful campaign. However, if you jump the gun and don’t look at all angles, you could end up costing yourself money and your ad campaign will be in vain.

Read what others have to say by reading Groupon reviews.