BUSTED: Groupon And Living Social Caught Inflating Regular Prices To Make Deals Look Better

CuteChocobo on 14/10/2011 - 23:37

I think most OBers knows that companies inflate prices on group-buy vouchers to make it look more attractive to consumers. But I didn't expect them to write anything about it. Although this is only a small sample size, but it's the first step to make other consumerss aware of this little trickery! Read on bargain-hunters =)

Groupon and LivingSocial succeed because consumers perceive them as great deals. But is that true?

Perhaps not.

Thumbtack.com called 10 vendors offering daily deals (five from Groupon and five from LivingSocial) and found >eight instances where they were quoted a price over the phone that was cheaper than the advertised regular price >being offered.

All five of Groupon's prices were higher than the same merchant's price when called, and three of the >LivingSocial ones were.

Granted, this is an extremely small sample size, but it is worth noting. Part of the reason people like buying >Groupon and LivingSocial so much is the fact that they are saving a huge percentage. By inflating the regular >advertised price, the companies can increase the percentage saved.

Read more here http://www.businessinsider.com/are-groupon-and-living-social…

In the article comment, one person said (spelling mistakes are as original). I think this optical store owner need to go back to high school and learn how to spell:

In my business, I use groupon. And YES, I always increase my prices. Why? After all the discounts, I won't make >enough from the deal to make it worth my while.

This is a very common thing. WHen a store offers you 50% OFF, do you ever ask "50% OFF WHAT?"

I own a chain of optical stores. I am always running "BUY ONE GET ONE FREE". The public is so stupid that they >never wonder what the price of ONE is. They see the FREE and have orgasims.

I also jack up my prices at back to school time and then give great "discounts" for kids and families. Come >back in December when I am starving and you will be able to get the same thing for far less. Threaten to walk >out and go to my competitors and my prices will really drop.

The public is stupid.

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closed Comments

  • andy19363 on 14/10/2011 - 23:41
    +4

    (in best Homer Simpson voice) …mmmm….. orgasims

    • CuteChocobo on 14/10/2011 - 23:43
      +2

      hahaha good one =)
      I thought orga-sims is a new type of sim card at first… facepalm

  • M1ndFu7 on 15/10/2011 - 03:01
    +1

    Groupon is the biggest Liar in the world. Okay maybe not but it must be one of the biggest if not biggest.

    Bought a TomTom XXL540M from them couple months back, confirmed with them that it comes with LIFETIME map updates.

    Checked with TOMTOM representative, and found out that the Lifetime update only applies to North America, and there is NO SUCH product in Australia that does Lifetime Map update for TomTom.

    Called them up 30+ times, each time getting told by groupon's liar representative that it does have the lifetime map update.

    One Rep told me to send it back to their warehouse, which in fact is Dick Smith, and got the item rejected by them saying I should deal with groupon.

    Called TomTom up, got a verification through email that there is no lifetime map update for products sold in Australia.

    Forwarded the email to groupon, they did not respond (for 2 weeks).
    Called them up, they say will contact me within the next week.
    Its been 4months since the last call.

    Couldnt really be bothered talking to those GROUPON LIARS again.

    How can they tell me LIES when I have confirmed the facts with the actual manufacturer?

    Anyway to all you bargainers out there. Steer clear of Groupon. Although I might sound sour, but their rep have been a pain in the Arse to deal with, each time throwing their temper on me when I have been humble and speaking to them nicely about the fact that the product they are selling does not match the description they provided.

    I am pissed. Even after 4months.

    • illusionarybreeze on 15/10/2011 - 14:51

      Did you take it up with the relevant authorities for false advertising?

      • M1ndFu7 on 16/10/2011 - 00:11

        sadly, no. I just figure it is not worth the trouble as I am not sure about the procedure and such.

        But I believe if they continue to operate the way they did, sooner or later they will piss some one off enough to get them into trouble.

        To all my fellow bargainers, please be extra careful when purchasing of these sites ESPECIALLY Groupon.

  • cashcow on 15/10/2011 - 11:04
    +2

    Consumer Affairs love this stuff.
    I suggest you have a chat with them.

    • Fliedlice on 16/10/2011 - 20:27
      +1

      I heard Consumer Affairs take a fair bit of time to process the whole issue though.

      Or did you mean A Current Affairs (ACA)? lol

  • kirasuran on 15/10/2011 - 14:01
    +1

    thanks cutechocobo, nice to see a little research has been done on this !

    though to me, i pretty much knew that group buying sites did this. some of the dinners they offer are definitely NOT worth 150$ RRP ,and closer to the actual 50$ discounted price you get.

    It helps if you go do a bit of research about the restaurant and its prices first before you buy the deal.

    And i have a feeling the optical store in the article is Specsavers or Budget Eyewear….

  • c64 on 16/10/2011 - 00:57

    wouldn't it make more sense just to cut out the middlemen (group buy sites) which are basically just leeching 50% of the money.

    • CuteChocobo on 16/10/2011 - 03:48
      +1

      yes, and that is why if you sometimes see a deal that you like. Just call the shop/service directly and as for similar offers. Usually they will give it to you + some bonus. Especially those holiday packages, as I had experienced. (I think it was a 3 night in QLD gold cost a while back, I call them up, instead of a cheap courtyard room. We got upgraded to a sea-view suite for the same price!!)

      So sometimes it's worth it just to make that extra effort to get a better bargain! Win-win for all (Except the group-buy sites)

  • slowmo on 17/10/2011 - 00:19
    +1

    http://paidcontent.org/article/419-more-bad-news-for-groupon…

    More Bad News For Groupon: Sales Team Files Class-Action Suit

  • SirFlibbled on 17/10/2011 - 16:36

    I always do my research before buying. Sometimes it's cheaper elsewhere sometimes it's not. I went out for dinner on Sat night where the voucher claimed it was a $60 value for a pizza, garlic bread, bruscetta, salad and 2 glasses of wine (all shared so you get one each). Turned out when looking at the menu that yes it did come up to $60.

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