« Grocery prices to see 'significant' jump in February: report | Main | Site boosts charity of the day, $1 at a time »

January 31, 2022

Is Groupon changing what people are willing to pay?

With the rise of online coupon megasites like Groupon and LivingSocial – as well as smaller players like SwarmJam, Wagjag and TeamBuy – it seems that saving is easier than ever before.

Groupon_social_buying Even though it still has its proponents, gone are the days of scissors and coupon clipping around the kitchen table. Now all the best deals arrive in your inbox each day, generally targeted to your postal code.

Regardless of which site you choose, merchants offer a coupon on a city-specific basis that can be redeemed for a product or service, providing a predetermined number of customers buys into the deal. Users identify a deal and then spread information about it to their friends, so that they can collectively buy the item with a volume-based discount.

But will they all last?

Theoretically, the more coupon sites there are, the more competitive the deals as sponsors press for deeper and deeper discounts from businesses. Over time, this may backfire and undermine the ability of these sites to get businesses to participate.

There’s no question though that all these blast emails get the restaurant's or spa’s name out in front of thousands of people and can actually get some of them through the doors. But will those bums fill the seats again or will their owners simply flit among other coupon-offering venues?

There's a reason why most group-buy discounts aren't just 10 or 20 per cent off: nobody would bother to buy them otherwise. But what about small businesses that are bullied into offering a steeper discount than they’re comfortable with? Or those that have to staff up to handle unprofitable volume?

And then there are all those folks who’ve found their choices overbooked, unfriendly or out of business

What’s your experience with group buying sites? Are you a satisfied regular or have you been burned once too often? As a sponsor, has increased traffic translated into improved profits?

By Gordon Powers, MSN Money



Post a comment


Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...