Six hundred people rushed to buy half-price entry to the Botanical Gardens in New York this week. In San Francisco, 760 bagel-lovers signed up for a dozen at a cutprice $5 (£3) from the House of Bagels.

The bargain-hunters were among a million people across the United States who have signed up to an internet service that uses crowd participation to offer substantial retail discounts. Moreover, they are guinea pigs in an experiment — one of an increasing number — trying to combine commerce with the social side of the internet.

Groupon.com is a start-up that is harnessing the social power of the web to find new ways to reach customers and turn a profit. In less than a year the Chicago-based business has expanded to 23 cities across America. It will soon come to London, its first stop in an expansion into Europe.

The company has sold 600,000 “groupons”, or group coupons, and saved subscribers just under $27 million. Groupon, according to Andrew Mason, its 28-year-old chief executive, is on track to bring in more than $100 million in revenue in 2010.

“We are the ambassadors of the crowd. We listen to what they want, we talk to the merchants on their behalf and then, hopefully, we come back with something that they really like,” Mr Mason said, Groupon’s business model is a new twist on the power of web-based mass participation. Its business model revolves around social interaction. Groupon deals with local businesses in each city and then offers a deal of the day — say $75 worth of tennis lessons for $35. Customers are told at the outset how many participants are needed to make an offer fly. They provide credit card information with the understanding that if not enough people sign up, the deal is off.

It is rare for deals to fall through. The rise in social networks such as Facebook and Twitter mean that consumers quickly encourage friends to join in.

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