Why “Daily Deal” sites are not always really deals

I’m not a big fan of trying to save money using daily deal sites – they advertise their services to be 40% – 60% off, but are they really such great deals? Below are some reasons why they may not be so awesome:

1. Not really the % discount they claim. Keep in mind that even though it might say 50% off, it may have been marked up to make it appear that there is a higher discount.

2.  Will the business still be around for you to use the coupon? Many companies that offer daily deals are “mom and pop” (which was originally Groupon’s intention to promote).  Having owned a small business myself, I can attest to how desperate things can become, and to what lengths we will go when offering deals or coupons, even when/if on the brink of shutting down. What options would you have if the business were to go under?  Can you go back to the daily deal site and ask for your money back?  Will they just issue you a credit and you have to buy something you didn’t really want?

3.  Will you actually use the coupon?  How many times have you had a great coupon and had every intention of using it, only to have things come up here and there, until you finally realized that the coupon was expired, or just didn’t have the energy to go use it?  Businesses count on a certain percentage of buyers to not use the pre-purchased coupon. Same economics goes for giftcards.

4. Pre-payment required.  I hate the idea of parting with my money before enjoying whatever it is I’m purchasing. I know that it doesn’t matter, I’ll still have to cough up the funds after, but something about paying for it beforehand doesn’t sit well with me. I have always been “anti” businesses that float cash as part of their business model.

5.  It may end up hurting the business more than helping.  I’m all for supporting small businesses over large corporations. One of my friends used one for his business – it turns out that the daily deal site not only takes 50%, but charges service fees on top of it, leaving my friend with only about 35%, which didn’t even cover the costs. On top of that, the phone was ringing off the hook, the customers were cheap and trying to lowball him on everything, and it turned out to be a bad experience, for him at least.  He said he will never do it again.

If you’re using them for a one-time experience or for a place your frequent, it’s not a bad idea. Just make sure you’re really going to go and use it before purchasing. Also, there’s such market saturation now, I think even Facebook is trying to get in on the action – I wonder if Groupon doesn’t regret, even a teeny, tiny bit, not selling to Google for $6 billion just a few short months ago.

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One thought on “Why “Daily Deal” sites are not always really deals

  1. Thanks for such a comprehensive list!

    I feel pretty much the same way about “Groupon” and other daily deal sites. Sometimes, it can save money, but most times, I think it encourages “spaving”. I wrote about my thoughts here, if you’d like to check it out. http://fabulouslyfrugirl.wordpress.com/2010/12/10/groupon-does-not-save-me-money/

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