The seduction of online deals

A gourmet vegetarian cooking class followed by a five-course feast for only $27 but worth $55, or so the website claimed. My mother could not resist the 51 per cent savings advertised on the group coupon website, so she bought two of them, one for me and one for her. She claimed it would be “a bonding experience.”

The deal was offered on a now-defunct website which used to offer daily deals in the Montreal and Toronto areas before it merged with its parent company, Beyond the Rack. It was just one of the dozens and dozens of group-buying websites that have popped up online in the last few years. Groupon and Living Social are among the most popular with over 60 million subscribers worldwide between the two of them.

The way Groupon works is that the site offers its members daily deals in their city. A minimum number of packages must to be sold before midnight in order for the deal to be valid. Promoting what they call “collective buying power,” the site offers savings on everything from restaurants to spa packages. LivingSocial works similarly, offering deals on vacations, adventures and activities. The only difference is that they do not have the same minimum buying requirements. Both offer additional savings if the deal is referred to a friend who then purchases it.

The concept has definitely caught on and together the companies boast savings of over $1 billion. While I have heard many good things from friends who have made use of the site, my own personal experience was not the best.

The voucher instructed the purchaser to call and make a reservation prior to the class, which my mother did. The theme was Indian cuisine and we arrived at 6:20 p.m. – 10 minutes ahead of the schedule class time – to a room full of women and several other mother-daughter combos. The people we assumed to be other cooking-class participants sat on one side of the store sipping tea, while a cluster of women stood in the kitchen side of the store chatting. Twelve seats surrounded the kitchen’s large wooden counter though the area looked better suited for a group of 4. Ingredients were stacked on the side, next to a woman who I assumed to be the chef.

Finally at 6:45 p.m., we were invited into the kitchen to grab a seat. The chef singled me out and invited me to sit in the stool directly next to her, saying I looked like “trouble.” Uninterested in being her pet, I took the stool next to my mother. Then there was a scramble to find extra seats, because there were not enough. The class turned out to be more of a lecture than a cooking class. The chef spoke about the energy of food, the importance of fresh produce and did the cooking while we listened. Not once in the entire class did a participant get to make any part of the meal. We received four, not five courses, all of which used the same curry paste.

While I felt a little misled by the description on the coupon, most people I know who have used these sites only have good things to say. And while it is easy to question why a company would offer their products, meals or services for half off, John Molson School of Business senior marketing lecturer and academic director Harold J. Simpkins explains that for small companies who have a limited budget, group-buying sites are a really effective form of advertising. It also allows them to limit how many discounts are sold and under what conditions.

The sites are generally very specific with which companies and businesses they promote, says Simpkins, because bad experiences tend to circulate quickly and could easily ruin the site’s reputation. Even if the group-buying company has good intentions, it is still up to the buyer to make sure that what they are purchasing is exactly what they want, otherwise they may suffer from buyer’s remorse.


Quick tips

Here are some tips on how to avoid being disappointed by online deals:


1. Don’t get seduced. Simpkins warns buyers not to get swept up in the deep discount. “People tend to see this large discount percentage and sometimes act without thinking the purchase through.”


2. Do your research. “As would be the case with anything that you would buy, do your research,” emphasizes Simpkins. “Just because it is being offered through one of these coupon sites does not mean the product is going to be satisfactory to you.” This involves checking out both the site you are purchasing off of and the company offering the deal.


3. Follow up on the purchase. Lea Prevel Katsanis, the chair and associate professor of the marketing department at Concordia University, warns shoppers that most of the businesses who utilize these services are small. Therefore, they might not be prepared to handle the numbers of people who sign up for their offers and might not have the capacity to handle all the requests for service that occur because of the deal. It can be helpful to call the location beforehand and find out when is the best time to redeem your purchase.


4. Make sure it is really a deal. It is a good idea to check out the website of the company offering the service as sometimes you actually get a better deal without going through LivingSocial or Groupon but by going directly to the company itself, writes Prevel Katsanis.


5. Read the fine print. It is important to read the specifications of the deal because many come with expiration dates and some might have specifications when it comes to redeeming the purchase. Be sure to check the language the course is offered in, whether there is a restriction to new customers only, if it is valid for eat-in and/or takeout, whether tax is included, what happens to unredeemed cash, if it can be combined with other offers, etc.


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