Groupon is the new coupon. This online, deal-of-the-day, group-buying craze offers steep discounts for a wide range of products and services. It can be a wonderful thing in this sluggish economy, a perfect way for savvy consumers to save money in uncertain times, but only if they show some restraint.
Groupons are marketed throughout the United States, Canada, the United Kingdom and Brazil, and are personalized and localized to match up businesses hungry for new customers with consumers looking for bargains.
Spawned by the recent recession, Groupon inspired a newfound frugality that makes it cool to be cheap. It takes coupon clipping to new levels, well beyond the starving college students and stay-at-home moms who clip and sort and sift through the traditional coupon books.
Groupons for Almost Anything
Groupons are available for virtually any consumer product, from restaurant dining to recreational activities. You can use them for drinks at the bar or T-shirts at a retail shop. You can get a massage or take a luxurious vacation with Groupon deals.
The discounts usually are steep, too, ranging from 40 to 70 percent off the regular rates. From flower shops to canoe trips, almost anything goes with Groupon.
Getting started is easy, too. Go to Groupon.com, and sign up for free. Provide an e-mail address and a ZIP code, and the bargains will start flooding into your inbox, from a $40-dinner-for-$20 at a local restaurant, to a 40 percent discount on a big-screen television at the big-box store.
Picking and choosing what’s right for you, though, is where it gets dicey. If Groupon is used for things you already were planning to spend money on, then it becomes a very positive thing. Who doesn’t like saving money? But if it sparks binge spending for things you really can’t afford, or really don’t need, then it becomes a negative. Deep discounts for unplanned purchases may lead you into frivolous spending.
With Groupon, It’s Buyer Beware
Buyer’s remorse is not uncommon with Groupon. Most of the deals are only offered for a short period of time, and they change daily, so you have to act quickly to buy. What sounds like a great thing on Friday night might not look so good Tuesday morning.
So take off the beer goggles.
The best advice is to read the fine print, and think it through, before purchasing the discount. Most deals have restrictions, or expiration dates that can come quickly.
A $50 meal for $25 at an overpriced restaurant sounds great until you spend another $100 for drinks and appetizers and desserts. And when the food is no better than what you recently had at the local diner, the Groupon doesn’t seem so cool.
Paying for a coupon you really don’t need — or don’t even have time to use — isn’t such a good deal after all.
The Growth of Groupons
Groupon was wildly popular when it launched in 2008, spreading like wildfire after starting in Chicago. Sales grew by 60 percent in 2009 and another 70 percent the following year. It sparked a host of copycat sites like BuyWithMe and LivingSocial, which quickly cut into Groupon’s profits, along with the realization that everything is not always as great as it seems.
Groupon can be like those cash-back reward credit cards. It’s great to get the cash back, but not if you are spending a lot more money just to get the reward.
The new Groupon Rewards program makes it even more dangerous for the impulse buyer. The loyalty program, which is designed to turn the bargain shopper into a regular customer, is another way to save, and another way to spend.
The one-time patronage is not what the businesses want, but that’s really how a consumer can save with Groupon. Buying nine items to get the 10th one free isn’t exactly in your best interest.
So be careful. If you use Groupon wisely, it’s a wonderful way to save a little cash. If you are the impulsive type, and the limited-time-only deals go to your head, then it might be better to save your money.
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].