Disadvantages being a customer of group buying and deal sites. Lessons Learnt

Sale Deals on shirts

Buy one get one. But do you want one?

It seems like the Group buying and deal sites are the new ladies online. They seem to be the talk of the town. Thousands of people are setting up a cheap shop where millions of businesses list their steep discounted services. In a hope to gather leads (who they think will later convert).

Okay now don’t smile you stingy, I know we all have experienced that exotic spa never to return back as a paying customer. I guess before all of you start becoming real cheapos it is my moral responsibility to write the disadvantages of being a deal hunter! This is my firsthand experience and do pass on to any friend who you believe will soon start devaluing things thinking he can grab a deal on anything.

The deals are not always dirt cheap

Yes quite shocking but it is true. The very purpose that these sites exist is not always true. Most of the times a very good hype is created around the product to make you believe it is worth a particular sum quoted; then comes the whopping 80% off tag. I have experienced spas and salons via these sites but end of the day I felt I could easily bargain and get similar discount directly. Also just scan what kind of deals do you get? They are all in the life style segment where margins are fat enough to lure you with steep discounts. You will never find basic commodities being sold cheap! Come on, every ones in for some business you see.

Be in touch and keep getting looted

Most of the deal sites keep you updated by inundating you with text messages or emails. This is important for them. You need to be informed what is going cheap. You buy stuff and they make a few dimes. I have noticed, most of us on our first encounter with anything selling cheap tend to buy more even if we don’t need it. With more products selling cheap; you want to keep track of them so that you never miss the golden deal. As if the world is going to end tomorrow. You are in touch with deals and you keep getting looted.

You might NOT get the real product/service experience

Big sales hoardingWhile businesses do want a flood of footfalls to their shops, they immediately get disappointed if they are not able to upsell or sell memberships. This reflects in their experience. I have seen salons not giving a weekend appointment because they consider you – ‘the deal buyer’ a cheap customer. Others are always given more attention than you. You are a voucher and not dollars. Things have even gone to the extent where I was interested in buying membership and rather providing me a brochure or pamphlet, the owner just wrote cheap plans and handed to me on a piece of paper!

Deals are not always of the quality touted.

This one’s similar to what we discussed. I would summarize this saying “Copywriting of these Groupons is better than customer experience their deals give!” You can easily write every other restaurant as sumptuous and quote their delicacies as being the best. But that is not what the real case always is. We all have different tastes. It is better to first do a quick research (aka Google it), for the business or restaurant you are getting deal for.

Deals are not a long term game but you will lose long term

Understand this thought very well. Probably tattoo it on your hand. Once you develop this lifestyle habit it will be very difficult to change. While I am no priest to preach minimalism, nor would I ask you to chastise your feelings; I would humbly request you to first analyze the standard of living you can afford. The habit of luxury can really kill your long term goals. Being a bargain hunter is good, but no bargain is good if you are getting something you don’t want. You won’t benefit from it. Period

You become a cheapo and don’t want to pay more

Bargain hunting tribes

Bargain hunting tribes

Probably this is another feeling that I get when I now see a spa. No, believe me. We have around 10 good deal sites in India and living in a metro that’s when the fun begins. On any ordinary day you will find at least 15 spa deals when you consider all the deal sites together. (I am just talking of Mumbai). So when I think of a massage will I never think it is worth paying the amount they claim its worth? To some extent it has been good for me. Before the lifestyle bug really hit me I am made a cheapo. But the problem is I just don’t value things anymore. I feel everything can be really cheap. All you need is a group buying deal site in that industry. Am I talking cheap? Curse the deal sites.

I am nowhere against any site, rather if Groupon gets listed in India probably I will try speculating its share price. However end of the day – I would prefer to feel need of a product and then search for a bargain, rather than knowing what is available for cheap and trying to grab it as if tomorrow never comes on group buying or deal sites.

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{ 5 comments }

Annkur June 1, 2011 at 5:03 pm

Nice post Himanshu, some thoughts

A) this should make a good read for service providers giving deals on these sites

B) something that I really want as a consumer (largely to protect my self as a buyer who makes his choice) is a deal service that gives me location based deals on demand. Look at the latest groupon mobile offering, it’s cool. So if I am headed to say Andheri west, I don’t mind Skipping ccd and having a coffee at barista if I got a deal the. But planning to go to andheri west barista on a fine evening, just because I have deal would mean screwing up my behavior, ability to chose and respect as a consumer. More than that it would mean that I no longer dictate what I want in life. I may be hyping it up, but I care a lot for who / what controls my choices.

(ps: written in my iPad 2 that wasn’t bought for $50)

Himanshu Chanda June 1, 2011 at 5:42 pm

Comment 100% accepted Annkur. I believe what you have highlighted is the next phase of Deal Sites or probably Next phase of consumer buying. Let me just take the same example from a different angle.

Not only it is beneficial to us as a consumer to get deals on demand, its beneficial to businesses too. I as a owner of CCD dont want to throw any deals but one fine Saturday due to say some festival, no one is dropping by. I can chose to generate and throw deals on demand and get them down on demand if I see a free footfall of 10+ ppl. Thats power to businesses and power to the consumer!

Madhav Shivpuri June 2, 2011 at 12:36 am

Another thought provoking post.

What is CCD?

I agree that group buying may not be good for the business owner some times as they are not converting them into loyal customers. I would like to address that problem. I am looking to connect with people who have such connections to retail business and also to sales people who have experience of getting deals from business.

Himanshu Chanda June 2, 2011 at 5:39 am

CCD stands for Cafe Coffee Day. A retail chain of coffee shops… sorry for using abbreviations.

I guess trying to make the deal customers loyal will be working on a wrong problem. I would rather try to work with marketing where people come and ask for my products and I dont need to push via deal sites.

The only scenario where I see deal sites being very worthy is where you have a new product which people dont understand till they use it. So to reach them rather than passing free samples, I would probably put it on a deal site. What do you say ??

ajay Kumar July 21, 2011 at 2:34 pm

I would like to add my inputs and I hope thats respected…
Group buying is a concept where Products are always are good and bargain..every one should do that to save money. No matter what some says no merchant will ever trade at loss so he is always at gain, although at lower margins…..go buy product from such sites.
As far as services are concerned, i would say…its transforming people’s lives.
I would personally go for a spa that costs me Rs.2000 but yes I would always try when available at 80% discount and when I use it once, i get addicted. I realize what are the benefits, as a result of which there is at least one person who was not a prospect but has become one.
so my question is are these sites not converting the non-prospective customers to prospective ones….
I am talking on behalf of customers and merchants ……we are at least getting 10% repeat customers(Really don’t care 90% of them don’t turn back)….after all it’s promotion activity.
I love Group buying sites…..keep loving that, Guys!!!

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