Not Quite Sold On Local Group Buying Sites

I’ve been an online group buy participant as long as the World Wide Web has been a viable tool of commerce. Heck, I picked up one of the very first DVD players at a steep discount on uBid back in 1998 and did time on Paul Allen’s Mercata before they folded in early 2001. As far as I can tell, solely focused group buying branded sites never really went mainstream. Woot’s probably come closest with a large draw amongst of geeky and their $110 million exit (thank you, Amazon). Mercata once proclaimed “The more people who buy, the lower the price.” And even if most sites featuring that particular hook haven’t found long term success, the trend is in full effect as large retailers such Best Buy and Amazon demonstrate on a fairly regular basis.

As ZNF readers know, local, but still online, group buying has taken off in the last year via Groupon and LivingSocial. Yet, for me, it’s been a mixed bag. Instead of actually buying physical merchandise, these sites essentially sell coupons or vouchers to local businesses. In my experience, most haven’t been conveniently located or particularly compelling. But we’re always on the lookout for a deal, and have purchased three dining-related Groupons in recent months.

First off, the lack of instant gratification has been an issue… because, beyond cyberspace, I’m not the most organized. Specifically, I purchased a $50 food and beverage voucher for $25 (to Vinifera Wine Bar & Bistro) and forgot to put it to use before it expired. The other two Groupons were to Chicken Out, a local chain similar to Boston Market. The first dealio was redeemed with no problem, just beating the expiration date. But the second experience was kinda bizarre. Much like Groupon’s Super Bowl commercials (above).

My wife attempted to redeem her Chicken Out rotisserie chicken Groupon yesterday. But the Reston outpost refused to honor the voucher and claimed it was counterfeit. Weird. And annoying. So of course I tweeted it. Folks, including Groupon, suggested I email in for remedy. Which I did… laying out the account and contact info (my wife’s), along with the unique Groupon voucher code. They promptly replied, apologized, and said they’d refund our purchase. Nice! But a few minutes later, I received a follow-up email refunding the prior Chicken Out Groupon from my account that had already been used. While it’s more favorable to us in terms of dollar amount, both aspects of this experience seems to suggest these guys may be experiencing some growing pains. (Groupon, please feel free to unrefund/refund the proper purchases. We’re not interested in cheating anybody.)

As a home owner once again, we’re also leveraging the web to research and coordinate various projects. And I immediately joined Angie’s List, which has also been something of a mixed bag. As this post is specific to group buys and local discounts, I’ll focus on their Big Deal.

The Big Deal is similar to Groupon in that it offers discounts on local services. But while Groupons are daily, the Big Deal seems a bit more sporadic. In late December, I impulsively purchased an air duct cleaning voucher ($200)… as our home has accumulated about 35 years of dust and debris in the ductwork and this was on my to-do list. Not only would I save a few bucks, I wouldn’t have to bother researching a legit vendor. Unfortunately, I didn’t stop to think that this particular company might not provide service on Saturdays. And, as it turns out, they don’t. So any money I would have saved will be given back through the vacation time I’ll need to take. Like my organizational issue above, this serves as a reminder to do your homework before proceeding. Fortunately, the vendor has outstanding reviews with minimal indications of an up-sell, so I’m hopeful it’ll work out OK whenever I finally manage to schedule them. Assuming I remember.

Lastly, an old grade school buddy has launched CupidRatings. The first cut of the site provides a rather static listing of romantic dining options in South Florida. However, it seems they intend to capitalize on the local online coupon craze by launching “Cupid Deals” at some point. Given the competition and typically limited traffic a burgeoning site generates, they’ve got their work cut out for them as they seek to monetize. But I guess I’m doing my part. :)

20 thoughts on “Not Quite Sold On Local Group Buying Sites”

  1. I’ve had mixed success. Normally I don’t want to fool with these things because there’s always some catch.

    A friend bought one for food and drinks and we used it without a problem.

    My sister recently purchased one for me so we went to the restaurant and ate/drank and then tried to use it and they said, “Oh, it’s not this location…” Ok – maybe I should have read it closer but it’s all the same chain (and I think all the same owner). So, now I’ve to go find this other location, which isn’t convenient and the reality is – I’d really rather not deal with it. I’m happy just paying for what I use and not trying to do gymnastics to get some kind of deal.

  2. Best groupon I ever bought was for an indoor skydiving place in NH (http://www.skyventurenh.com/). I gave it to the wife as a birthday present, we had an awesome time and paid about half price.

    I agree that groupon is getting a bit “spammy” There have been way too many hair, spa, and nail groupons. Occasionally good ones come along for some ski resorts, but they are few and far between.

  3. An economist friend pointed out that for proprietors these are effectively borrowing programs with the costs related to the discount rate and how quickly the deals are claimed (and how many go unclaimed).

    I’ve started browsing SocialSpoils.com, which is an aggregator of Groupon deals. I’ve found some deals of interest to me that were marketed to other cities, but are just for online shopping for shippable merchandise (food stuffs) rather than walk in deals.

  4. Those indoor skydiving places should be in about every major city, it is a franchise at this point. Downside that doesn’t really get reported, is that the whole DIVE part is about 90 seconds. Yep, 1.5 minutes. For 50$ for two it MIGHT be an interesting one time thing, but I’d rather go karting for a half hour for 50$.

    What seems to be happening in the “deals” space is fragmentation and specialization. Also, the groupons of the world as they get bigger and bigger have to crank our MORE AND MORE deals everyday (and not just more and more cities) Of course that means that the quality and pricing of the deals is going to suffer with some deals literally being nothing more than a marketing effort for some companies. For the consumer some of the deals are just junk and should be avoided. Travels deals continue to move to the more mainstream sites like jetsetter, tablethotels, voyage-prive etc. Even priceline is getting into the action and even BLOGS are getting into the action (see the great 138$ Boxee offer from SAI.com)

    Honestly, groupon should have taken the 6-8$B from the GOOG when they had the offer. At this point, I don’t really see how they/one company can capture that much marketshare to make it worthwhile.

  5. You don’t lose your money if a Groupon doesn’t get used by the expiration date. It simply reverts to the face value you paid. So, if you paid $25 for $50 worth of food at a restaurant and don’t make it there before the Groupon expires, your certificate is still worth the $25 you paid. The same goes for Livingsocial and pretty much all of the other sites.

  6. Styggiti, thanks for the heads up – good news. We’ll try to remember to use the voucher at face value… assuming Vinifera honors it and before they’re out of business. ;) (We had brunch there a few weeks back and the four of us were literally the only customers in the place during our 90 minutes or so. Spooky.)

    Here’s the related verbiage from Groupon’s FAQ:

    Once a Groupon reaches its expiration date, it loses its promotional value, but you can still redeem it at the price you paid for the length of time stated by gift certificate laws in your state.

    tivoboy, I’d gladly pay $50 for 90 seconds of weightlessness/flight.

  7. The deal we got was $45 for a 4 minute flight. You sit in a chamber just outside the wind tunnel, then rotate through 4 times, 1 minute of flight each time.

    I plan on going back and organize a group of friend to share a flight session.

    Also, once you learn how to maintain your position in the chamber, the instructor takes you up and down the chamber as they change wind speed. Its like a 30′ drop from the top to the bottom of the chamber.

    Dave, looks there might be a closer one to you in North Carolina: http://www.paracletexp.com/ The only others on the east coast are in NH and FL.

  8. I’ve bought my fair share of groupons and restaurant.com certificates and never had a problem other than some minor wrinkles. I think the confusion you get from servers and at shops is part of the nature of the beast… these companies are using these services to drive new customers, it’s unlikely they’ll be doing it enough that it will be part of their standard training for staff.

    But even this will lessen over time I’m sure…

  9. Except this is the 4th Groupon Chicken Out has run in the last 6 months… They seemed very clear, adamant in fact, that our voucher was counterfeit and that the number was in the wrong range. Not sure if the error was on their side or Groupon’s. Others in the store at the same time cashing in Groupons didn’t seem to have any problems. The implication/suggestion that somehow my wife had been phished or was attempting to abuse the system was somewhat unwelcome. (If we need another local data point – Rob Pegoraro of the Washington Post responded to my tweet with a Groupon-wife issue of his own.)

    Perhaps Groupon needs a bat line that these restaurants or services can call when there are questions or issues. Maybe there already is and, like you say, the staff isn’t aware/trained. Or can’t be bothered? Again, growing pains. The experience isn’t enough to abandon Chicken Out or Groupon, but it’s (barely) interesting enough to blog on a slow Friday.

    (I’m much more agitated that I missed out on that $138 SAI Boxee Box deal. Their PR guy should have hit me. I used to hear from them before news hit, now I hear after. Would have made a good blog post… and a good purchase. Ah well.)

  10. I got two good deals on groupon that weren’t local.
    First was a Shutterfly 8×10 20 page photo book for 50%off and then an even better deal on Canvas on Demand for a 16×20 gallery wrap canvas for $45 (regularly $130 including S/H) when I uploaded my photo they said it would look better on 16×24 and they upgraded me for free. also I was able to get quantity discount by ordering a duplicate of the canvas for my dad at the time of upload for only $50 more. so I got two 16×24 for $95 total when one 16×20 alone would have cost me $130.

  11. I went to put my groupon order for Valentine flowers on February 11 to be delivered on February 14. Well, the earliest I could have them delivered was on February 15. I got some bizarre apology letter later that day that said groupons weren’t working for the merchant, so it turns out those who even tried to order the groupons weren’t even working. Nevertheless, I’m going to save my $80 worth of groupon flowers that I spent $30 on ($20 + $20 – $10 savings = $30 since this was my first groupon order and I got a $10 discount) on to be delivered on her birthday. That was my FIRST groupon experience mind you. I was so frustrated when I woke up and I couldn’t order them. I said to myself, I’m not going to be that guy who has flowers delivered the day AFTER valentine’s day — totally felt ripped off. Note: I picked up tulips at the local grocery store the day off.

  12. Note: This was the groupon apology:

    —————
    Thanks for your interest in the FTD Groupon.

    We try to offer the best deals possible, while also making sure all of the details are up front and easy to understand. The deal’s original terms were that the Groupon could not be combined with other offers and discounts. For sale items on FTD.com, this meant that you were not able to realize both discounts. We understand that is confusing and upsetting to a number of people—especially since you expect a great deal from us every time.

    To make this right, we’ve worked together with FTD to make sure that discounts available on FTD.com will now also be available to use with your Groupon. For those of you who already purchased items that were on sale on FTD.com, FTD will automatically issue you a refund on the credit card you used with the difference as additional savings. Please allow 5-7 business days for this to show on your statement.

    We’re really sorry for any confusion this deal has caused. This resolution should now ensure that you get the maximum value for your FTD Groupon, even if you’ve already redeemed. We hope this resolution is to your satisfaction.
    —————

    When I ordered the groupon, I totally said to myself that I felt like I was scamming the system. Trying to get a good deal on flowers. Then when I couldn’t order the flowers for the day I needed them, which by the way I set out to order them before work on Feb 11, it was I that was scammed. Buying coupons just feels weird… So, I agree with you Dave.

  13. Well it is a right move by Groupon by dismantling its “Super Bowl” ADS. Groupon is getting better and better day by day and grouponbot and groupon is getting more visitors day by day according to google because of their tremendous and increasingly better services. I love shopping from “grouponbot” They offer nice deals!

  14. Personally, I noticed a decrease in interesting offers on Groupon and I live in a huge metro area.

    Anyway, I think, Groupon was crazy not to accept a rich buyout offer from Google. Just because Facebook didn’t sell itself and now worth a lot more, doesn’t mean that every startup is going to enjoy the same fate. The only thing crazier than Groupon’s rejection was Path not accepting $100 million from Google!

  15. One of the concerns I have about such deals as Groupon and Restaurant.com discount “gift certificates” is that, too often, they’re used by people who’d otherwise go to the establishment and pay full price. Existing customers, in other words. I can sympathize with the impulse — everyone likes a discount — but the problem is that the small business generally gets none of the money. Not just half — none. In fact, they’re paying for the privilege. (In some cases, they get a cut, but if, say, you’re paying $20 for $40 worth, assume they’re only getting $5 or $10 of your $20.)

    Thus, the deal is a great loss leader for businesses that legitimately get new business in the door and can build a customer base that will be back to pay full price, but a lousy deal for businesses that get a flood of bargain-seekers who’ll never be back until there’s another bargain.

  16. Yah, good point. I remember reading an article a few months back by an unhappy Groupon merchant and that was their point. Like consumers, guess these businesses need to do their homework, before proceeding.

    For us, it did allow us to “rediscover” Chicken Out – hadn’t been there in years. And it must be working out for them in terms of increased sales or folks buying much more than what the Groupon covers since they’ve run promotions four times. Although it could also be a last ditch effort… these guys have shut down a few outposts over the last couple months.

  17. What’s only just started to be looked at are the ramifications to the merchant/business. The cut that places like groupon and teambuy take is 50% plus other fees on top of the total sales done (this was conveniently left out until too late!)
    The idea that these things are great for drumming up business is really a lie – studies have shown that most group buy coupon users only spend the exact amount of the deal, and don’t return to the business to pay for services or products at full price. So a merchant takes a huge loss just to put the deal out there, and after 6 months to a year they still aren’t seeing any monetary return.

    You should read/see the materials these companies put out to convince you their promotion deals are the greatest business solution you’ve ever dreamed of though… the words “Is your business ready for THOUSANDS OF NEW, LOYAL CUSTOMERS?!?!” or similar, were used copiously, to say the least.

    I suggest spending your ad money on good old-fashioned advertising, and let your business speak for itself, no discount required.

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