Got Your Groupon?

Category: Social-Networking

A couple of my friends are trying to get me to join a site called Groupon, I can see that it has something to so with online coupons, but I'm wary because of multi-level marketing scams that have bitten me in the past. What exactly is Groupon, and if it's legit, can it save me money with no downside?

What is A Groupon?

Groupon is either the champion of small businesses or their destroyer, depending on who is speaking. The deal-of-the-day Web site delivers what it promises: lots of brand new customers. But you have to be careful what you ask for, whether you are a consumer or a merchant.

Groupon was founded in 2008, is wildly popular among consumers for good reason. In about 150 local markets, the firm offers awesome daily deals from local and national businesses. Groupon offers 50 to 90 per cent discounts. The catch is that you have to buy the Groupon ("group coupon") online that same day and a minimum number of Groupons must be purchased or the deal is off. If the minimum is not met, your credit card is not charged.
Groupon Coupon

A lot of consumers like the Groupon deals. The company has over 50 million U.S. subscribers who receive a daily Groupon email. Groupon sales are approaching $1 billion per year faster than any other company in history has. I can understand your concern about MLM scams, but Groupon definitely doesn't fall into that category. If a friend forwards you a Groupon offer, most likely they're thinking you'll also be interested in the discounted product or service. And by letting others know, there is a better chance that the deal will attract the minimum number of buyers required. Groupon does offer a $10 bounty for new customers, so your friend might also be secretly hoping that you'll join for that reason. But there is no multi-level marketing aspect to Groupon.

Groupon's demographics are dominated by young, educated women, so many of its offers fall into the health, beauty, and fashion categories. Steep discounts at restaurants, bars, and nightclubs are also common offers, as are music, electronics, and other trendy items.

Why Buy a Groupon?

The benefit for businesses is new customers who might not try an unfamiliar business or product at regular prices. The hope is to turn first-timers into repeat customers, something Groupon claims to do very well. As a consumer, I've jumped at several Groupon offers. One got me to try a new pizza joint in my area, and I'm sure I'll be a repeat customer. Another offer was for a half-price oil change at a local service station. According to the company, 97 per cent of its business customers are satisfied with their Groupon experience and would run another Groupon offer.

But a Groupon can backfire on a business. First, Groupon won't even consider a discount offer of less than 50 per cent. Then, Groupon takes 50 per cent of the Groupon sale price for itself, leaving the business client with half of half, or one-quarter of the regular price. Most businesses lose money on Groupons, hoping to make it up in repeat business. An avalanche of bargain-crazed Groupon customers can overwhelm a small business, leading to dissatisfaction among regular customers.

None the less, Groupon is wildly successful. It recently turned down a $6 billion buy-out offer from Google, and has filed for an IPO. If imitation is flattery, Groupon must be blushing. Over 100 deal-of-the-day imitators have sprung up in the U.S. alone.

LivingSocial is Groupon's nearest competitor. Its unique twist is a referral program: buy a deal, get three friends to buy the same deal, and your deal becomes free. Other Groupon wannabes include BuyWithMe.com, Tippr.com, GroupSwoop.com, and TwoBuckDuck.com. Each Groupon competitor has its own wrinkle.

TwoBuckDuck, for example, charges you two dollars to buy one of its deals; but you may save dozens more dollars. DealQuad specializes in deals for college students. WeddingWire offers deals for brides. Dozens of other specialty "groupon" sites can be found.

Have you used Groupon or a similar service? Tell me what you think! Post your comment or question below...

 
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Most recent comments on "Got Your Groupon?"

Posted by:

Fred Belfitt
08 Jun 2011

Looks like a Pyramid job to me.


Posted by:

Kathy
08 Jun 2011

I've used Groupon...for a cafe near me, but most of their offerings don't interest me. I do always check them out when I get their emails, just in case they are offering something I can use.


Posted by:

Bill Fairbrother
09 Jun 2011

I've used both Groupon and LivingSocial, and have positive experiences with both.

Simply put, companies are sacrificing profit on one sale to a potential new customer. Of course they hope you will enjoy their product and will come back and buy again at the regular price. In actuality, some will come back and some won't. It's a gamble for the business, but it's a sure thing for we consumers. We get a bargain price, and in my experience, a quality product. I'm certainly not interested in every single offer that they put out, but I've found absolutely no evidence of scamming or false advertising. So far, I've received exactly what was promised, and at a price I was very happy to pay.


Posted by:

Anne
09 Jun 2011

Groupon has introduced me to two new restaurants. I have become a regular customer at one. The other was just yesterday and provided an enjoyable ride in the countryside to their location. I think it is a great idea.


Posted by:

Larry Wood
09 Jun 2011

How do I make it STOP!

EDITOR'S NOTE: Did you try the "unsubscribe with one click" link at the bottom of the Groupon emails?


Posted by:

Karen Davis
09 Jun 2011


I have used 3 LivingSocial deals in the past few months. The first was a pay $10, get $20 at Amazon. Looked too good to be true and at my age, I know that if so, it nearly always is. However, in this case, it was good as gold. I have also tried out a local art supply place (I probably won't return but they also likely didn't lose money on me that day as I spent way more than the coupon) and my daughter found a new hairdresser that she loves and so will go back.

There is some fine print in some of the deals that you need to read, but the merchant is wanting a new customer and so I think that most times, you will get the good deal that you paid for. I can see where it could be bad for a business if they didn't plan carefully or had a much larger than expected response.


Posted by:

Vince
09 Jun 2011

Very few of the deals Groupon offers interest me, however the few that I used were great. No problems using Groupon.


Posted by:

writeman47
11 Jun 2011

As you say, many of the deals are targeted at women but I've bought my wife a half-price massage. For myself, I bought a Buck Baker Driving School NASCAR experience. I thought $150 for a $395 deal was pretty excellent. I don't buy many of the deals, but check them daily and when I find one I want, it's worth the wait and the effort.


Posted by:

Dave in Indy
15 Jun 2011

Groupon is not the first deal a day site - but is the first for retail / services. I recall Woot was around a year or so before Groupon but it is for products.


Posted by:

Roger
25 Jun 2011

I have used many deals from Groupon and Buywithme. I recently found a site called http://www.edealio.com which sends me a single email containing the daily deals from many of these sites...


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