Group buying hit the mainstream in 2008, with the launch of Groupon, a U.S. based group buying site. While the concept isn't new, it has been much-lauded by the press as the way forward for those who want to save money and get great deals. Let's look at how group buying works, and ask whether it's really such a money saving miracle.
How Does Group Buying Work?
Group buying is actually a more consumer friendly name for an "assurance contract" – a system that merchants have used for hundreds of years. To explain the idea of group buying in simple terms: a company makes an agreement that at a particular time or on a certain day, a product or service will be offered at a discounted price. The catch is that for the deal to go through, a set number of individuals must make the purchase. In group buying terminology, this is known as reaching tipping point. Normally the amount of deals available is limited, which means if it is a really special deal, you may miss out if you don't sign up quickly enough.
When you use a group buying, you will be asked to join as a member before you can buy a deal. If you find a deal that you are interested in, with just a few clicks, you can agree to participate in the deal – if it reaches tipping point. If that happens, you'll receive an email with a coupon code that you can use to get your discount. Of course, you should always take time to read the small print before you agree to any purchase, so that you are fully aware of what the deal does and does not include.
How Do I Benefit from Group Buying?
With discounts ranging as high as 90% on some group buying deals, using group buying allows you to try products and services that might otherwise have been out of your financial reach, adding variety and new experiences to your life.
So, Where Do I Find These Deals?
New group buying sites are popping up all the time, some highlighting national offers while others focus on local deals, usually in major cities. Living Social and Groupon (Star Deals, in Australia) are two of the most popular at present. Deal aggregator websites offer a daily summary of offers from a selection of the main group buying companies, and are a good way to check out what is available in your area, without having to check individual pages.
Sounds Good – But Does it Have Any Downsides?
One eye-opener is the fact that within 2 years of the Groupon craze beginning, the term ”Groupon remorse” has been coined. Many of the coupons purchased through daily deal sites are never used, which means people are paying out for nothing! It has been suggested that this is because people purchase deals and never find the time to take them up, meaning that their cash is wasted.
Another significant factor to consider as you browse through daily deals is that most of the services and products on offer could be classified as luxuries. Heavily discounted spa days, haircuts with top stylists, helicopter rides, fine dining and theatre tickets may look appealing on your computer screen, but when you have a budget to keep to, it's only worth buying if you genuinely need it. For any impulsive shoppers out there, the buzz of group buying could be perhaps a little too addictive, so before you click that confirm button, ask yourself “Do I really need this?” If you have a tendency to impulse buy and want to try group buying, you might find it sensible to set a limit on your purchases to curb excess spending.
Another issue which has been noted by group buyers is that sometimes businesses offering deals give a lower quality service than would be expected if the customer were paying full price - for example, you may be seated on a less popular table in a restaurant. This shouldn't put you off group buying though – if there is a problem, remember that you have consumer rights even on discounted products.
To Group Buy, or Not?
The idea behind group buying is certainly a clever one, and has caught public attention in a major way. You may find some interesting deals and if you enjoy eating in restaurants or having beauty treatments on a regular basis, why not enjoy them at a lower price? Those on a tighter budget may find daily deal sites irrelevant, or a little too tempting. However it is worth keeping an eye on these sites, as from time to time you may see a useful deal which will genuinely save you money.