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The best discounts on the web

Groupon, RetailMeNot, Swoopo and other new-fangled shopping sites can help you get great deals on practically anything. Read on to know more.

india Updated: Dec 09, 2009 20:12 IST

The halls of the Chicago Art Institute are lined with the work of various risk-takers. Among them: Grant Wood, Frank Lloyd Wright and Mary Jane Drews. Their media? Paintings, furniture and coupons, respectively.

Drews isn't a painter or an architect, but she is a risk taker. As the membership manager at the Chicago museum, Drews increased membership 5% by taking a chance on Groupon, an Internet company that offers consumers deep discounts on a variety of products, services and activities.

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Groupon discounts are often half off the listed price, but the catch is that a certain number of people have to sign up for the offer to activate the discount. Drews needed 300 people to click on the Groupon offer to activate the museum's 50% off, $40 membership deal. To her surprise, nearly 5,000 people signed up on Groupon in just one weekend.

The financial risks are low using Groupon. Unlike direct mailings and phone solicitations, which Drews says generally pays for itself after a significant capital outlay, the Groupon offer didn't require any upfront investment from the museum. Instead, Groupon takes a cut of the sales.

"It actually turned out to be a financially smart move," Drews says. "They do revenue sharing, so I'm not going to pretend that they did it for nothing, but there were no upfront costs, and to us, that was phenomenal."

Groupon also helped Drews tap into the 18-to 35-year-old market, a younger demographic than the museum's average member age of 55. "We wanted to test in the younger market with very little risk," she says. "We thought this was a great opportunity to do that."

Groupon founder Andrew Mason says that running audience experiments with no upfront investment is a compelling offer, compared to local television advertising. "When you run a big company, you just hand over a huge check and pray that it's going to make a difference," he says. "You're just hoping the commercial you put on TV is driving customers into the door, but there's no real way to measure it."

Growing the Chicago Art Institute's 130-year-old membership base by 5% in one weekend is impressive, but it isn't Groupon's only success story. Mason says a Chicago-area skydiving company recently increased its annual sales by 25% after selling $230 tandem jumps for $130 on Groupon.

All told, Groupon is now selling 200,000 coupons a month, and Mason says his company is on track to bring in $100 million in revenues over the next year.

That's great for Mason, an entrepreneur who dropped out of grad school to begin work on the idea. It's even better news for Groupon investors like New Enterprise Associates, which dropped $4.8 million into a platform that was originally intended to solve political problems. Groupon launched in Chicago last year and has since expanded to 35 cities, including Austin, Texas; Cleveland; and New York.

The company now employs 100 people, mostly in sales and tasked with spreading the word as Groupon opens up in new cities. In established cities like Chicago, his work appears to speak for itself: Mason says Groupon gets about 100 Chicago-area companies asking about the service each day.

Groupon is one way to get great deals online, but there are scads of other sites that also offer big discounts. Retailmenot is a clearinghouse for digital coupons that uses crowdsourcing to vote on whether the coupons still work. It's one of the best resources around for penny-pitching online.

Swoopo is a leader in a growing trend of auction sites that rely on buying bids, rather than buying items. You plunk down cash for the opportunity to bid against everyone else. The process can be a nail biter, but items like a Sony ( SNE - news - people ) PlayStation will end up selling for around $10.