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The Group Couponing Craze: Good for Merchants, Bad for Consumers

This article was written by in Consumer. 23 comments.


Whether it’s extreme couponing or group-couponing, the idea of saving money has the country frantically searching for deals and spreading the word through social networking. I’ve had to hide a number of friends whose total social discourse has been reduced to posts about their favorite deals — and WRITING IN ALL CAPITAL LETTERS when they’re sharing a deal that benefits them if their friends sign up, too. The fact that “couponing” is an accepted word in a culture that doesn’t frequently verb nouns unless the words truly speak to the zeitgeist indicates that we may be working so hard to save money that it may have the opposite effect.

Don’t get me wrong. In general, saving money is a great idea. Most people need to do more of it. Although the trend seems to be embedded in today’s social consciousness, perhaps due to the recession and the struggling middle class, couponing does not always coincide with saving money.

In fact, couponing encourages consumers to spend more than they would have otherwise. Getting new deals every day in an email inbox lets marketers walk in your home and sell you products you don’t need and wouldn’t have purchased if you didn’t willingly invite them in. Spending hours scouring for coupons or driving miles out of your way to save a few dollars is an inefficient use of time and money. Your time spent attempting to save $0.50 on a can of beans could be better spent earning several dollars with a quick task or more working overtime at your job, helping you afford beans at the everyday price — and more.

Furthermore, certain deal sites are known to make deals appear more attractive than they are. For example, one coupon I saw recently looked like a great deal: $200 off a notebook computer, for a limited time, through a deal website. A price history check showed that the deal was only $50 off that retailer’s normal price — and another major website without a special deal was offering the same computer for $100 less than the “deal” price.

The deals propagated online — especially those that persist from the same retailers — are only popular because they work for the retailers. Retailers pay fees to companies like LivingSocial and Groupon, so if they weren’t profiting from the arrangement, they would stop offering the deals. Merchants are profiting because consumers respond to these marketing tactics with the belief that they’re saving money. According to the latest government surveys, consumer spending is increasing. The increase may be due to the perception of deals or due to an improving economy, but regardless of the reason, retailers are not slowing down their relationships with deal-broadcasting services. This is an indication that people aren’t just shifting purchases from a non-deal to a deal; they are purchasing more than they would be otherwise.

From a retailer’s point of view, a deal that goes viral is great at first. It brings in a good profit right away — but these customers don’t stick around. In fact, many retailers complain that these are some of the worst customers they have. These buyers will be off looking for the next deal. No retailer would be able to afford creating once-in-a-lifetime deals every month to retain extreme bargain hunters, and some don’t want to.

I’m not calling for an end to the frenzy over the possibility of saving money. I do think it’s best to be an educated consumer, and that means taking a second to ask yourself a few questions rather than blindly jumping on the deal bandwagon.

  • Is this something I need, or am I only buying this because it was marketed to me?
  • Is this really a good deal or does it only look like one?

This may be too much to ask for many people, but any pause filled with a short burst of mental activity before a purchase can’t hurt.

Published or updated April 28, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 23 comments… read them below or add one }

avatar wylerassociate ♦906 (Dime)

I think this coupon craze in america has gotten ridiculous especially groupon. First of all, how many times a month are people going to go grocery shopping? I’m sure there are people who shop once or twice a week not for necessities but to get these deals. It’s smart to have a membership at costco or sam’s club this way you can buy food to last you 1-2 months maybe more.

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avatar Jack

The best deals with Groupon and its like are for services and places you use anyway. For example, a wine bar by us that we go to every couple of weeks had one that gave you a $50 coupon for $20. It was a no-brainer.

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avatar Krantcents

The Internet has given us personal marketing and now group or social marketing to motivate us to spend. I succumbed by buying a coupon with a $25 value for $3.50 for a restaurant I frequent anyway. Not a bad deal, however the trend is more of this! Some of it is not as good and it will entice you to spend.

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avatar nimrodel ♦42 (Newbie)

The thing you have to remember is it’s only a good deal if you would have bought it (or something comparable) anyway. There was a deal awhile back where you could get a $20 amazon gift certificate for $10 — that was a *great* deal for me.

I don’t entirely agree with the statement “Your time spent attempting to save $0.50 on a can of beans could be better spent earning several dollars with a quick task or more working overtime at your job, helping you afford beans at the everyday price”. I’m salaried; I don’t get paid for working overtime. Also, there are websites out there that match up sales and coupons for you, which reduces the time and effort you have to put in to very little.

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avatar Barb

I agree–I generally go over the coupons in the newspaper while watching tv; those 2 or 3 minutes I spend aren’t minutes I’m going to use to…I don’t know, dust? And while I’m sure there are people buying Groupons and similar and letting them go to waste, most people I know use them up. I’ve used mine to go kayaking and ziplining; things I’d like to do, but not enough to pay full price. I’ve gotten massages for good rates–again, something I enjoy, but am not willing to spend full price on.

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avatar Ceecee ♦796 (Dime)

I cut most of the coupons—if something I wouldn’t use is free with coupon, I can donate it or give it away. Otherwise, only what I would buy anyway. I stay away from group coupons—most of the items don’t appeal to me anyway. Coupons are a boon if used wisely.

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avatar tigernicole86 ♦55 (Newbie)

there are some groupons that I really love(mostly because I was looking for it anyways). I’ve given some as gifts but there are some that are really not worth it. Though,a lot of the Spas are worth it to me.

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avatar Cejay ♦1,521 (Half-Dollar)

I coupon but I am careful to use ones for things we have always used. I try to stay away from the New Deals since they are things that have high value at first, then go down in value but we are hooked on the item. I have never bought a Groupon and really have not interest since I can usually buy the item cheaper if I search and wait.

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avatar Cejay ♦1,521 (Half-Dollar)

By the way I hate the movie Extreme Couponing. It portrays all couponers as hoarders and selfish people.

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avatar skylog ♦368 (Nickel)

i agree, while there will also be the “fringe” in every group, there are many people just trying to save a few dollars here and there. in addition, while i think that some people may abuse the system to some degree, many who are somewhat agressive are just normal people trying to make the most of what they have and provide better for their family/group.

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avatar faithfueledbennetts ♦264 (Nickel)

I am part of a social network that has a coupon swapping section and these ladies are serious about their coupons! I do think if you are smart, you can save money, but time is a big factor to weigh in. The thing I find unbelievable is that people actually buy coupons on sites like ebay. I think majority of people who think they are saving money, are losing time, and buying things they would not otherwise due to their coupon.

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avatar lynn ♦155 (Cent)

Personally I agree with your comment. But, I have a friend who buys high value coupons and makes a killing at the store on these items. I just don’t need 40 eye shadows, but she gives them as gifts to her students after buying them for pennies or free. So I guess there is a place for this activity. It’s just not for everyone.

My question is: Where do the sellers get all the coupons?????

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avatar Jonathan

We primarily use Groupon for exciting experiences that we wouldn’t likely have if we had to pay full price. Yes, many of the things we’ve done through it (all of them?) are things we would not have even thought of doing had we not been inspired by Groupon, so no, it hasn’t saved us any money. But we’ve had a ton of fun at great prices riding Segways, going sailing, speed boat tours, etc. In fact we usually buy an extra pair of tickets and invite another couple along.

I would disagree though that daily deal sites like this are that good for retailers. Yes, they can bring in lots of business in the near term, but from what I’ve read most retailers/service providers take a loss on the business Groupon brings in but hope to make it up with a new base of regular customers. But many/most of those who buy using Groupon or the like are people who will only come when they can get it that cheap. Thus, little if any gain for the retailer.

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avatar Jenna, Adaptu Community Manager

I’ve only used Living Social and Groupon on a couple of deals for things I actually need or stores I actually go to on a regular basis. The best way I’ve found to avoid shopping on those sites is to unsubscribe to their emails. That way I only get forwards from friends who actually think I’d be interested in the particular deal or an invite to join in an activity if a group of friends all decide to purchase one deal.

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avatar Holly

I love Groupon. So far I have purchased two coupons for restaurants I had been wanting to try. Both deals were $40 worth of food and drink for $20. Not a bad deal at all!

There was one coupon for 65% off a tandem (2-person) parasail ride, something I have always wanted to do; however, I didn’t know anyone who wanted to join me, so I didn’t purchase.

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avatar DonnaFreedman ♦2,496 (Dollar)

I agree with everyone who says the key is to think “would I have bought this anyway?”
A few examples of “good” social commerce:
$20 worth of food at an Ethiopian restaurant in my neighborhood for $10: I kept meaning to try this place, and my sister and I take turns buying lunch after church — even with the tip, this will be cheaper than Panera! (Especially since I actually paid $8 due to a $2 sign-up bonus — and I *did* recommend it to a few friends, one of whom bought, so I have an extra $2 off anything else I choose to buy. The operative word would be “choose.”)
Exam, X-ray, cleaning and teeth-whitening kit for $29: If you don’t have dental insurance, you can’t beat $29 for a cleaning even if you don’t care about the kit
Eye exams and/or cheap glasses: Can’t remember numbers, but it was a super price
One-hour session with a professional portrait photographer, light retouching for five images, all photos on CD for $29: I bought this one myself and will use it next week because I’m in the market for a new blog photo, but it would work just as well if I wanted senior-year photos of my offspring
And, of course, any massages! If I can get professional bodywork for $29 to $35, I consider it money well spent

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avatar OrchidGirl ♦16 (Newbie)

I think they can be great if its something you would have bought anyways or brings an experience you want within your budget. I like to have a few groupons to various local restaurants on hand. Then when a friend wants to go out for dinner, I can say, I have groupons to x, y, and z. A few of my friends normally spend quite a bit when they go out – appetizer, drinks, desserts, etc. The groupon amount provides a mental anchor for them, which helps reign in spending. So I kinda save doubly.

I also like using them for local museums and events. Purchasing very discounted admission gets me out of the house doing things I enjoy at a low cost. Tomorrow I am going to a craft festival for $4 (instead of $9). Sure, I wouldn’t have gone without the groupon, but that is only because I wouldn’t have known about it. And it will be a lot more fun than anything I had originally planned on doing this weekend. Without these deals, I would find myself going out to eat or going to the movies more often – both of which are more expense.

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avatar Steve

At first it seems great when a coupon appears for a restaurant I regularly visit. But then when I go to redeem it, I feel bad because I know they are losing money on the transaction. Serving me has real (e.g. food) costs.

I don’t mind so much using it for a museum or other such event/attraction/etc. In that case serving me has minimal cost; the cost is all in the overhead, which they pay whether I visit or not.

But even so, sometimes it seems cheaper to use a 2-for-1 coupon from one of the many coupon books. That way I don’t have the risk that I won’t get to visit before the prepurchased deal expires. And furthermore, the merchant gets to keep half the money (vs. a social buying site where the site keeps 25% and the merchant only gets 25%.)

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avatar BobPhibbs,RetailDoc

Nothing could be further from the truth. Online discount coupon sites are not good for retailers – those oft used, “exposure,” “new customers,” “cost of marketing” don’t work. Restaurants in particular are diving into the Groupon/LivingSocial frenzy in hopes it is the magic bullet. What they are doing is commoditizing their own brand. That’s why I wrote a new book Groupon-Why Deep Discounts are Bad for Business which looks at all the fallacies of participating in these sites. You can read an excerpt at http://www.retaildoc.com/blog/groupon-worst-marketing-business/

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avatar DonnaFreedman ♦2,496 (Dollar)

@BobPhipps: That may be true some of the time but not all of the time. I myself am guilty of cherry-picking the massage deals. However, I have gone back at least once (paying full price) to two different masseuses whom I found through social buying vouchers.
The vouchers get my attention. For example, I kept meaning to try that Ethiopian restaurant in the six or so months since it opened. Yet out of forgetfulness or sheer habit I have eaten elsewhere.
Once I’ve visited with my sister I’ll know what the food is like. If It’s good, then every so often I’ll treat myself to lunch there WITHOUT a coupon. I like supporting smaller businesses vs. national chains. Would I have tried it without the voucher? Maybe, eventually. Or maybe not: It’s been open all this time and I haven’t been in.

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avatar lynn ♦155 (Cent)

Like anything else, coupons are a good thing, if used wisely. If an item ends up being free, then getting it will benefit someone. I get free things and I don’t even know what they are used for. I donate them to Hospice. They are familiar with them. I run a blog and I am very careful that I only post what could be a good deal. No junk food or processed foods. If someone buys organic milk regularly, then a .50 coupon for that item is helpful.

Exceling at it is a learned behavior.

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avatar skylog ♦368 (Nickel)

while i feel that anyone could end up buying something they would not normally purchase from time to time, i think, stepping back and looking at the big picture, coupons/deals are a great thing for most people.

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avatar cmsvmom

I’m an extreme couponer, living in an area where I am forced into self employment because I am old and there are no jobs. I have been couponing for over 30 years. I remember when double coupons were new. If I did not coupon, I would not eat.

I am not physically capable of giant thousand dollar hauls as I live alone. However I plan my shopping at particular stores several times a week. For example, I made two trips to publix totalling about $65 after their in store specials this week. With coupons, the total out of pocket for both trips was $15.

Yes. I bought produce and dairy. I do not eat much meat.

I get a lot of my coupons at the local recycling center. I am amazed at what people throw away.

You never buy an item just because you have a coupon. YOu strategize. You get rain checks. You focus on the hunt and the score. And over time, it really pays off.

The internet has been wonderful for coupon folks, because we share our information with thousands of others just like us. Since the extreme couponing show started, I notice a few more people at the recycling center, and more people peering at my large box of coupons and watching me, as if to say hmm, how DOES she do that. I have also notices a lot more people TRYING to do the extreme coupon thing all at once. It takes time. And it is amazing how fast you can really make a difference in your household budget, and your stockpile.

As for online deals, I participate in a few sites that offer points for purchases and surveys. I print my coupons from one, and get points for that. I accumulate enough points to redeem for a $25 Walmart card every two or three months. And this is all stuff I would normally do. I have used groupon, but in general what they have in my area is not all that appealing to me. It is worth watching just in case something comes up, like the coupons that were available for Amazon and Barnes and Noble – I buy a lot of gifts there because the shipping is so easy.

Whats needed in couponing is not less of it, it’s better training for cashiers and managers, and clearly posted policies to avoid confusion. I am always polite, but I do occasionally run into cashiers and night store managers who behave as though I am ripping them off personally even though everything I do is in accordance with store policy, I am courteous, and the store moves product and keeps my loyalty.

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