Penny-conscious consumers may be mad for sites like Groupon, but small-business owners and the stock market are less enthusiastic about the online service and others like it that offer deep discounts.

Groupon's stock price rose quickly when shares first went on sale in November, rocketing from US$20 to US$30. But by the closing bell on Friday they had fallen to just $19.95.

The site leads a $5-billion industry and sends discounts from local businesses, direct to the inbox of its subscribers.

For small business owners, it's a good way to lure new customers.

"We are advertising once a month, you know, it's good for the business. Better than nothing," said Beata Toth, manager of the Revive MedSpa in Toronto.

The problem is that the customers often don't come back and instead move on to the next deal, at the next business.

"I haven't returned to any. Not to say I've been unsatisfied with anything but, personally, you get one great deal and then... other than the stores that repeat that deal, I think you just move on to the next place," said consumer Tania Trifonopoulos.

Repeating the offer would be bad business, most merchants agree. Groupon advises companies not to offer a second deal "until they've analyzed the performance" of the first.

Worse, trend consultant Jeremy Gutsche says a lot of companies "haven't totally figured out" how to use Groupon's business model.

From a report by CTV's Seamus O'Regan