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Are Social Deal Sites (Groupon) Worth It?

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“Social shopping” is gaining in popularity right now. Through web sites like Living Social and Groupon, it is possible to get discounts on different products and services in your local area. Social deal web sites send you tips about which deals are available, and then you can go spend money, getting up to half off — or more — on different items.

One of the questions you have to ask yourself as you sign up for Living Social, Groupon or any other social deal site is this: Am I really saving money? Or are you just looking for a reason to spend it?

Spending Money is Still Spending Money

When you are spending money, no matter what sort of “deal” you are getting, you are still, in fact, spending money. While you can find some good bargains with social deal sites, it’s not as if you are putting that money into a high yield savings account or investing for the future. You are spending it. And, quite probably, on something you don’t need.

Before you get excited about saving getting $10 worth of frozen yogurt for $5, stop and ask yourself: Do you even want frozen yogurt? And how much frozen yogurt are going to get anyway? Going to a sweet shop to get a couple of scoops of frozen yogurt can be expensive. That $10 gift card (that you only paid $5 for) might only be enough for two dishes. You might be able to go to the store and get a half gallon of frozen yogurt for $5 — and it would provide more than two people with a delicious dessert.

Another issue you need to address is whether or not you would be spending money on that particular product or service if a deal wasn’t being offered. If you wouldn’t go buy that new pair of shoes anyway, the truth is that your social deal is providing you with an excuse to spend money that perhaps you should be using for something else.

What If You Will Use Your Social Deals?

Of course, social deals can be useful in some cases. My husband and I do a lot of shopping on Amazon. This includes buying our pasta, and a few other grocery items, in bulk. When a $20 Amazon promo balance was offered for $10, I signed up for a deal site just to get it. It saved us on the pasta order we made shortly thereafter. However, I have not used a social deal since then. The spa deal was tempting, but I’m not planning to get a spa treatment anytime soon — and even with the discount offered, the spa in question still cost more than the services I get at my local salon.

The key to making the most of social deals comes down, like so many things in personal finance, to honestly evaluating your needs and disciplining your spending. Like coupons for new products and services that you wouldn’t even think about getting under normal circumstances, social deals might not be the best option for you. Be choosey about which deals you spend money on, and make sure that your spending is part of your overall financial plan.

What’s your opinion of these local deal sites? Good deal or just a way to trick you into spending money on something you don’t need?

{ 30 comments, please add your thoughts now! }

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30 Responses to “Are Social Deal Sites (Groupon) Worth It?”

  1. NCTaxPro says:

    Since my better three-quarters and I eat out a lot (especially this time of year when we are both very busy and neither one of us feels much like cooking), we use the social deals a lot to try places that we probably wouldn’t try otherwise. We’ve found a fair number of keepers, probably around 40% of the places we tried we’ve felt are worth going back.

    You do have to be selective. I don’t particularly care for Chinese buffets, so the fact that one just offered a Groupon wouldn’t be enough to make me go.

  2. David M says:

    You do have to be very careful. I have purchased 3 groupon deals and used 2 so far.

    I do not think I “saved” any money on the 2 I used. For 1) I purchased a Sunday brunch at a restaurant I had visited in the past. The brunch was not very good – no savings. For another 2) it was a meat market – I could not find $20 dollars worth of product I “really wanted”. I bought some sausages and in the end I thru them away.

  3. I happen to think Groupon is awesome! It’s especially great for dates with my girlfriend. I live in SD, so there is tons to do. For example, I got some serious savings on jet ski rental, half off. Another deal I got was a chartered yacht for two. That was a savings of $300. It clearly saves you money, highly recommended!

    • Erik says:

      I think the point the article author was trying to make is that you haven’t really saved any money if you weren’t going to spend money on those activities in the first place.

      If you would’ve gone on a jet ski anyway then you saved money, if you went on it just because it was cheap then you lost money.

  4. Marilyn Knox says:

    I have purchased Groupon and Living whatever. You should be aware that you have to spend the whole amount–no leftovers. Like the Christmas bonuses (buy gift card, get extra card) you have to use the deal.

    So far I am happy. I have only purchased from nearby reputable firms except for $20.00 credit on Barnes and Noble for $10.00.

  5. Demi says:

    I, too, belong to Groupon. So far I have been very happy with the 12 deals I struck. Mind you…I am very frugal and only buy what I feel I really need. And most of those times I will split the cost with a friend…such as save $20 on a dinner. We save those for our dinner-n-movie night or afternoon matinee as a reward for ourselves once a month. Or save $20 at he meat market and stock up the freezer. Hey…we are only human. We, too, need an incentive or reward for a job well done (working hard all week). If any one has not tried Groupon, I suggest they sign up and just watch the type of daily deals that come by. One or two might be interesting and useful. Signing up is free. And you can tailor your e-mails to pretty much what you are looking for.

  6. Jason Ronis says:

    Yeah groupon is good if you were going to spend the higher amount anyway. I basically just wait for places I would be going already. If my wife and I are going to go out to eat every Friday and spend $25 – $30 and instead we can use a groupon coupon and spend $6 less…

    • Strebkr says:

      I do the same. Typically only buy things I would have purchased before but at a discount. There have been some places I have wanted to try for the first time. If those come up, I’ll buy one because I was going to try it anyways.

  7. Culpepper says:

    Not really worth it. I have many I never get around to using, and they do expire. But, I still peak!

  8. Echo says:

    I think that most of the deals end up being for more “luxury” type items that you wouldn’t typically buy at full price (visits to the spa come to mind).

    So in one way it’s a great way to try new things for a bargain, but you likely wouldn’t have bought the item in your typical shopping routine.

    My rule is to look for these types of deals only when I am actually looking to make a major purchase. I did this for window coverings and for a central vacuum recently and saved a bundle.

  9. daenyll says:

    I hopped on the Amazon deal, but other than maybe one other thing, none of the stuff I’ve seen is anything I’d purchase anyway. I still check the emails to see what they have, but unless it’s something I’ll use there’s no point.

  10. Can'tThinkofaCleverName says:

    It is great for things that you need or want anyway. Simply purchasing “the deal” as a compulsive buyer is going to cost you more money in the long run. I have been receiving e-mail deals on a daily basis for about 3 months and I have only purchased once and used it that night.

  11. Beth says:

    I think they are great when used as you describe. Every so often I go out to eat with friends, so if I see a restaurant we like on Groupon, I buy it. The amazon.com deal was great too.

  12. Holly says:

    I have purchased 3 Groupons in the last 4-5 months. Two were for carry out places and each gives me 2 meals for my $5. Since I tend to allow myself 1 cheap eat out/week this works VERY well. The other was a museum pass for a place I wanted to go so another $6 well spent.

    I do NOT do Groupons outside my area. The gas to travel is too $$$. I do NOT do the spa type groupons because this is something I do NOT do.

  13. zapeta says:

    We have bought several groupons for restaurants or local businesses that we wanted to try. We were able to try several restaurants and discover that we didn’t really like them at a discounted price, and in other cases we found places that we keep going back to.

  14. Scott says:

    Hey Jim, can you do some investigation and a follow-up post on if these sites are good deals for the businesses advertising on them? Someone recently suggested to us that we consider promoting our charity events through Groupon, but then someone else pointed out that Groupon’s fee is half the price paid by the consumer. And when the consumer is already getting a half-off discount, that means the business is getting only 25% of what they normally get (for a charity like us, that’s beyond a deal-killer). That leaves a pretty big gap to cover. Makes me wonder what the statistics are on how many businesses actually come back to these sites for a second go-round. Or maybe there’s a lot of one-and-dones? Again, what I wrote above is what I heard, so it might require some more checking into.

    • Jim says:

      Everything I’ve heard matches what you’ve said and most businesses use it for the advertising you get, it’s usually not an immediate positive ROI.

  15. cubiclegeoff says:

    I only buy a groupon if I know I will use it. So far, it’s worked out. $25 for $50 at Gap, I needed new jeans. $50 for $225 in eyeglasses, I was planning on getting new ones anyway. Half off at a local restaurant that we’ve been looking to try. As long as you’re picky and you get only what you’ll truly use, it’s worth it.

  16. Strebkr says:

    My best Groupon so far was an hour of flight time at a local airport for $45 bucks. Thats a steal!!!

  17. Erin says:

    Groupon has been a great site for my boyfriend and I! We have recently moved to a new city, and buying Groupons has given us an excuse to go out and try new things. At the beginning of the year we set a rule that we will have date night everyother week (can be a movie [redbox, $1 for 3 rentals] with take out or a night on the town [comedy club, $20 for admission for 2 and $30 food/bar credit]) and buying various Groupons has given us the opportunity to do fun new things at a fraction of the cost. This has also been a great opportunity for us to see what all Indianapolis has to offer!

  18. Strebkr says:

    What is Groupon’s cut? Lets use the GAP example. $50 GAP credit for $25. So Groupon is taking your $25 dollars. How much are they returning to GAP?

    I heard they take upwards of 50%? Can that be right. That means GAP would only get $12.50 for their $50 gift card the customer is expecting to spend.

    Can that be right?

    • Scott says:

      See my comment above and Jim’s reply. Sounds right. I’ll be interested to see how many businesses are still doing this a year from now once they can gather some ROI data. Not saying it will go away, but you might only see a Groupon once per week, not once per day.

      • saladdin says:

        And the businesses didn;t count on sites like slickdeals or fatwallet where people figure out how to make multiple addresses to circumvent the rules. Like a site selling subway cards for dallas/ft.worth area but people from Vermont buying them. People think they are being smart when in fact they are being dishonest given the TOS and will kill future deals.

        The good deals will be rare.

        • Strebkr says:

          If there is a loophole people will find it. Thats just human nature. Some people like it for the thrill of the chase. Honestly, if the company doesn’t close the hole then thats their problem. Not everyone is going to follow the TOS.

      • Strebkr says:

        Sorry Scott – I see your comment now. So you do know for a fact that Groupon takes 50%? That just sounds like a HUGE cut of the action. No wonder their valuation is sky high.

  19. govenar says:

    It can be useful even if you weren’t going to make that particular purchase anyway, if it lets you try a more expensive place that wouldn’t normally go to, for the same price as a cheaper place.

  20. skylog says:

    as with everything, there needs to be a balance. as long as this was money that was going to be spent regardless, and you are getting something cheaper than you would have normally, them yes, they are worth it. otherwise, chasing deals to save money that you would not have spent is a losing proposition.

    i did the 10 for 20 living social deal, and got it for free by referring three people. that deal was worth it for me, especially when considering i regularly shop at amazon.com

  21. mannymacho says:

    I think Groupon has been great for trying out new things that I wouldn’t normally think about (like the flight time above). I guess time will tell whether with their huge cut they are sustainable or not.

  22. Katie says:

    I love groupon! A lot of great deals. I like to use groupon for massages that would usually cost more than I’m willing to pay.


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