Groupon is getting a lot of attention now, especially since it has announced it is going public with an IPO. To see how Groupon works, go to www.grouponworks.com.
While Groupon is primarily geared for the retail sector, it is possible for wholesale vendors to peddle their products at retail using a Groupon discount. However, a recent article in PCWorld contains some powerful reasons for smalll businesses not to use Groupon. Go here for the full article.
From my own experience, I have witnessed several companies in the small buiness category that failed because of their eagerness to get sales or a large account through "giving away the farm" discounting. In many cases, they could not produce product to meet the demand.