Overview
Many speculators are saying that Groupon is leading us into the next Dot Com Bubble and their recent IPO is based on a flawed business model and they will go belly up at some point.
But Google offered them $6B for the company, and they typically don’t spend that kind of cash unless it’s something huge like YouTube. So they must be doing something right, but for whom, the consumer, small and large businesses, or themselves?
The Claim
The big claim that Groupon makes is that you can save a ton on food and local events if you take advantage of one of their offers. The gimmick is that there’s a limited number of offers available, and once they’re gone they’re gone, it’s back to full price for the rest of us.
The Hype
The hype is that people don’t want to be left out of a great deal. There’s large amounts of greed and jealousy going on here on the part of the consumer. It’s that whole mentality that if you don’t buy this offer, someone else is going to benefit from it, so you’d better get it before they do.
If you were going to go to a restaurant anyway, and you manage to snag an offer from Groupon, then it functions pretty well. But if you start buying tickets to things you don’t really want to go to, or buying food at places you don’t really want to eat at just because they run an offer, you might have a problem.
The Cost
The costs associated with Groupon get passed to the small businesses, so you as a consumer don’t have to worry about them. Groupon takes their cut and the business gets what’s leftover. Presumably the business is running the offer in attempt to win over new and repeat customers.
They are willing to heavily discount their offers to get people interested, hoping that once someone tries their restaurant or club, that they’ll be back for more at a later date and pay full price, and hopefully bring others.
The Commitment
Once you sign up for Groupon your inbox might get inundated with offers. You actually have to pounce on deals as they pop up or you’ll be left behind. You can’t passively use the service and hope to get deals delivered to you. It requires a purchasing decision each time you take advantage of an offer. Once you buy a deal you’ll have to go to the restaurant or club, or whatever event you bought into.
Evaluation
If you’re into the night life, or into eating around town at different restaurants then you will be the type of person that benefits most from the deals available at Groupon. However, as far as long term stability goes, you probably will get less and less great offers the longer they’re in business. At some point they will hit the limit of businesses that can benefit from their service, and the offers will become overused, and overdone.
For the consumer, Groupon
can be a fun and somewhat addictive way to get things in your local area at reduced rates. It caters mostly to spopaholics that like to spend money on impulse purchases. As a way to get discounts on a regular basis for things you actually need, it’s not very practical.Sure, you can get steep discounts, what amounts to nearly freebies, but you’ll still have to pay something, and often times the businesses aren’t taking a loss, even while giving the discount they’re still probably covering their costs.
Our Recommendation
Sign up for Groupon and give it a spin. It doesn’t cost anything to get the deals delivered to your inbox. It can get rather annoying to constantly get bombarded with product and service offers. If this happens it’s easy enough to unsubscribe.
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View Comments
I haven't joined the Groupon bandwagon yet, but by the looks of the reviews I'm reading, I guess I should! I have a friend who uses Groupon and loves it...in fact, we've tried out a few new restaurants together because of deals she got on Groupon.
Rebecca A.: I think that's very rude of restaurants to feel annoyed at people using Groupon. My friend has told me of several restaurants she discovered through it, and she continues to go to several of them. She probably wouldn't have gone if it weren't for Groupon. It helps bring business to places you might not have gone to in the first place.
Groupon is wonderful! I love Groupon. I have added Groupon as an App on my iPhone. I check my Groupon several times a day. It updates you every day on what is on special on clothes, shoes, phones and even your nearby restaurants. I got a forty dollar deal at our local restaurant for only ten dollars. There is daily deals and deals that last for a few weeks. If you are an avid coupon user, then you must get Groupon. You can get it free online and add the App for your phone as it is free as well. One thing that may happen is that it is addicting always checking the deals.
A lot of my friends use Groupon, it seems like the deals you get are pretty amazing. Not too long ago, I went out with my friends to an Ethiopian restaurant, which was a little expensive. After they used their Groupon, though, the bill was practically nothing for how much food they got. Like Rebecca said above me, though, the server at the restaurant seemed a little peeved about the Groupon. Also, it always seems like they expire before you know it. They do really save you a lot of money, though, if you remember to use them and you don't mind being "that person" with a Groupon.
I have been a huge fan of Groupon since they first started out, but I have slacked off lately for a couple of reasons: First of all, I forget to use them! In the beginning, I would buy one and immediately go out and try the new restaurant - or get a killer deal on one I already knew I liked. But after a while they stacked up in my account and I just don't think about them. This may be because of the second problem: Many of the businesses get that Oh-God-Not-Another-Groupon look on whichever face greets you. I probably will continue to buy them, but only when the offer is one I know I'll use for sure.
I am an avid coupon clipper and a huge sucker for deals, so of course I signed up for Groupon as soon as I heard of it. I've also joined Seize the Deal, Living Social, and DealChicken, three other great discount sites. But Groupon is my favorite, and the one that offers the best and most relevant discounts for me personally. Lots of half off (or more) specials, plus bonuses (like $10 vouchers) every so often. I haven't used any vacation vouchers yet, but I'm sure I will when the time is right. Love this site!
Groupon is a great idea but they can be riddled with restrictions and some merchants apply arbitrary rules. I recently went to lunch with a friend who had a Groupon for a two for one meal at a local inn. We showed the Groupon to the server who immediately started to bristle and had to go ask about whether we could use it. It took ten minutes for her to come back and then she told us that they couldn't honor it as printed. By this time, we were ready to eat lunch and told her that we would order anyway but that was not the end...she took the coupon and went away for another ten minutes and then finally came back and said that they would honor it. Good grief.
I'm not sure how Groupon decides on the deals that will be offered but they certainly need to coach the businesses. It is easy for businesses to want the business but then they do need to uphold their end of the deal by honoring the coupons and not coming up with their own set of rules.
That was my experience but I do know many other people who use Groupons regularly with great success. The good news is that you will always be able to get a value that is at least equal to what you paid. Some businesses restrict the days of the week that the coupon will apply and there sometimes there is an expiration date so read the fine print.
I personally find Groupon to be quite useful for eating out at quality restaurants for cheaper. Although it really does depend on the deal offered though. Some deals are much better than others. But for the most part they can make going out much more enjoyable knowing your paying much less for the meal than would you would have if you didn't have a Groupon.
Just keep this in mind: You do have to pay the Groupons themselves in order to receive them.
Sounds worth trying.....it's free and easy to dump apparently. Who doesn't like to save money ? Actually on second thought......I would definitely be buying stuff I probably would otherwise not have and that's not a good thing for me really.
omg! Groupon is the best! I just cashed in on a $15.00 massage!! It was worth $65.00. I was in heaven. I was getting massaged for 30-minutes for the price of a pedicure. Knowing that I saved so much money made my experience all the more so enjoyable! My friend turned me on to Groupon, because we went to a STUDIO MOVIE GRILL girls night out, for only $5.00 per person. Can't beat the deals.
Caution though... Groupon is dangerous for an impulse shopper like me.
I see what you mean about Groupon being dangerous for impulse shoppers. Everything is so affordable that sometimes I feel like being more things that I need. Before the prices are so good I actually do go over my predetermined spending limit and I use to stress about it but I don't anymore. I save so much money using Groupon that I allow myself to go over my limit once in a while.
It would be different if I was paying full price but since I am not I don't really stress about it too much. I usually buy things that I need anyway. My philosophy is that it's best to buy something and realize that you didn't need it than to refrain from buying something that you'll need later.
Groupon Rocks!!
I could probably leave the comment at that, but it would no use to anyone :)
Some amazing deals that you just won't get in your typical high street sale.
Delivered direct to your email inbox, this couldn't be easier!
Although i will admit, it has increased my impulse buying :)
There's even deals on here that you'd not expect, not just standard products but even deals on services, i saw one last week for around £1000 off a dental brace!
Sounds crazy, but if you're looking for one, that's a deal and a half!