Pros & Cons of Group Buying Sites

[ 0 ] September 12, 2011 |

As we discussed earlier in this blog series, couponing started way back in the 1880s. One of the newest phenomenons to emerge onto the scene is the “group-buy” or “deal of the day” coupon.

If you live in the bustling metropolis of Toronto, New York, Boston or even Sydney, Australia, there’s a new deal every day just waiting for you to pounce on.

But not so fast, savvy-saver: Do you know exactly what the deal is about that deal?

The Big Players

Unless you’ve been living under a rock for the past few years, you’ve heard of Groupon. Groupon is pretty much the King Kong of the group buying world right now, however, there are currently over 200 group-buying sites – including LivingSocial, Teambuy and DealFind – with that number growing all the time.

How It Works

The first step is a little obvious – sign up. Then, just like magic, a new deal appears in your inbox. This could be something for, say, a $20 for a meal worth $50, or $20 off knitting lessons.

However, the deal can’t be used until it “tips”. This means a certain number of people have to buy the coupon too or else it’s a no-go. But once the deal tips (which is almost always), the coupon is released and made available for you to use. Go forth and save! Deal didn’t tip? You get your money back.

And like any business model, there are pros and cons attached.

Pros:

Blogger Amanda from Jill of Some Trades uses group-buying coupons towards things like cooking classes, horseback riding and yoga classes. She explains one pro: “Many times the offers come up more than once or on a different deal site (depending on where you live) so it’s possible to get in on the deal if you missed it and regretted it the first time around.” A few other pluses include:

  • Localized coupons based on your zip
  • Can get exceptional deals
  • Learn about new restaurants and stores

Cons:

But with every rainbow comes a few thunderstorms. Edward Nevraumont of Restauranteerse explains some basic psychology used in the system (put your math hats on, kids!): “A restaurant could give you 50% off! $10 for $20 in value, but if that restaurant will cost you $40 per person and you go with two people, that’s a $10 savings on $80 spent – closer to a 12% discount.” A few other pitfalls include:

  • If the business isn’t prepared, stock could run out or crowds could become overwhelming for staff
  • May be tempted to buy things you wouldn’t normally purchase
  • Bait & switches (raising the prices for the sale) are rare but have happened

If you should have difficulty using the coupons, refunds are honored. So – it’s not like you’d be playing roulette with the coupon. It’s just the hassle you have to worry about.

Basically, group-buying coupons are a great way to save money if you love eating at new restaurants and trying new things. Just be a little extra cautious, like pay attention to the expiry date and prices pre-coupon.

This is the fourth post in an 8-part blog series. Each Friday we will break down the different elements of couponing and show you how you can use them to become a savvy couponer. Related posts in this series:

Category: shopping tips

About Shannon: Shannon is a savvy saver and lover of all things fashion and beauty. As a lover of pop-culture, she'll keep you up-to-date on all the hottest news and trends. You can find her tweeting on @FabulousSavings. View author profile.

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