The truth behind Group Buying

Lwhyohwhy on 04/03/2012 - 10:04

Let me give you the truth about Group Buying.

First and foremost the major Group Buying companies are based in the US. They really don't care about Australia.

Second they have aggressive sales teams that convince many businesses that by putting so called "deals" onto their web sites they will "grow" their business. Sounds great in theory. But often the reality is the "deals" the Group Buying companies push are so aggressive the poor business owner, who is often already struggling with poor retail conditions, looses a lot of money on the "deal".

Third, the Group Buying company takes between 25% and 50% of the sale price for themselves. Once the coupons are sold they often take weeks to provide the service provider with details of who bought the coupons creating a perception that the service provider is dodgy or dodging the deal.

Forth, the Group Buying comapny controls the advertising. If the Group Buying company gets it wrong, who wears it - the service provider. A restaurant offers a "deal" Monday to Wednesday - the quite nights - the Group Buying comapny "forgets" to put this in the advertising. Does not take a genius to work out what happens - "dodgy deal at Restaurant".

My view is no deals are scams - all are done with the proper intent. But often the deals turn bad for all concerned.

What I strongly recommend for all you bargain hunters out there is really simple - sourse the deal from the Group Buying company - then ring the service supplier and say "Hey, I saw this deal on so and so group buying site. Will you do the same deal for me directly."

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  • rack on 04/03/2012 - 10:54
    +1

    Firstly what are these claims or theories of your based on.

    Secondly no matter how agressive sales people are, business should stop being stupid and get themselves involves in such things IF they can't afford it. Businesses should know how much minimum can they sell their products and services for taking into consideration the commission of group buying companies. So that they themselves don't start cutting loses.

    Let's say the group buying company lists something wrongly or missed out something. Don't you think it's the business owners responsibility to check what got listed on the group buy site and contact the group buying site first thing and let them know about this.

    I already put your recommendation. Sometimes i get lucky but some times i get told "No" you have to buy the coupon. But that where i laugh at these stupid businesses.

    • SirFlibbled on 22/03/2012 - 10:33

      Actually if a business wants to advertise one thing, and the site advertises the deal incorrectly, unless otherwise specified under the contract, the site will owe the business for any loss caused by the mistake.

      If I was a business, I would never sign a contract that places all the power in the site to advertise the deal that includes an indemnity from their negligence.

  • Geewhizz on 04/03/2012 - 11:27
    +1

    My view is no deals are scams - all are done with the proper intent.

    Not quite - the net is littered with complaints about hair and beauty deals in particular where the service provider knew full well that they would no longer be operating in a month or two's time, or

    'deals' where a telephone number that was given to make bookings is never answered, even from day one;

    or 'deals' where the service provider states that they are unable to provide the service straight away but are happy to extend the expiry date of the voucher, but still don't honour it, by which time, because it has expired the deals sites wash their hands of it.

  • krsone on 04/03/2012 - 21:15
    +1

    I havent posted on here before but would like to comment on this post.
    Our company runs up to 4 deals a week with different deal sites.

    Of all the main deal sites in Australia there ist one that I would say and hard to deal with or have any problems with.
    In the last 4 months we have run over 50 campaigns without a problem from the sites.

    They dont twist your arm to do a deal or to discount more than you can afford and if the customers are happy you do build up repeat buyers.

    We sell products only through the sites not services so not sure if that makes a difference.

    Each site has been wonderful for us and have treated us with respect, paid in the time frame agreed on and passed 1000's of customers our way .

  • voteoften on 05/03/2012 - 01:49

    whyohwhy-

    What is your point?

    Would an Aussie based company "care" about Australia?

    your rant makes no sense.

  • miq on 12/03/2012 - 12:53
    -1

    My view is that all these sites are frequented by cheapskate bogans who expect WAY too much for the pittance they are paying. They complain more, and are far more demanding than any other customer of the business, and in the case of restaurants etc. pretty much destroy its once good reputation via negative feedback on online review sites. Disgusting, really.

    • rack on 12/03/2012 - 13:58
      +2

      Sorry but i don't agree with your view. It's not the customer who goes begging to these businesses for vouchers and special deals but it's the business which is offering these in order to attract more customers. It's the businesses decision to charge less for their services. If they want to treat you differently they should specify that in their deal such as "coupon users will be treated like shit and their food will be dog food etc" . I can just imagine how many customers will buy such an offer then.

      People aren't demanding more then they pay for, they are demanding what was offered to them and what they paid for.

  • bb2013 on 15/03/2012 - 12:32
    +4

    As a small business owner in the service industry I have over the last 12 months implemented the deals as part of my marketing strategy. This is what I experienced: The majority of buyers of coupons are not cheapskate bogans but bargain hunters. Only a small percentage return and become regular clients. Appointments are sometimes very hard to get especially if the client wants an appointment on peak demand times like a Saturday or evening. Appointments need to be booked a few weeks to a few months in advance. If the clients wants to upgrade a service then there is an extra fee. Some buyers are understanding others do not understand at all. The deal companys have very smooth sales people and sometimes it is easy to get caught up in the process. The percentage that the business receives is very small some companies offer 50% but retain another 10% of the income and only pay after 80% of coupons have been redeemed. It is a general rule in business that 20% never redeem their coupons/gift vouchers / gift cards. The deal companies are changing their formula to retain market share as there is a major drop in deal purchasing. They are focusing on better deals for the business owner and not just simply the cheapest price possible to run a deal. This I think will be better because there will be fewer buyers at a higher price. At the lower number the business can handle the infux of new clients much better resulting in fewer unsatisfied coupon users. So hopefully we all win.

    • voteoften on 16/03/2012 - 04:05

      Thanks for that balanced point of view. I find that my buying has dropped off considerably. I don;t know if it's because I have reached personal saturation (I don;t even bother getting massages any longer. They are generally crap) or if the bargains seem to have disappeared.

      • me on 16/03/2012 - 09:29

        I have stopped group buying too…I barely buy any anymore, I think mainly because in the "early days" a) the deals were better value for money; and b) they had a longer expiry.

  • [Deactivated] on 19/03/2012 - 07:49

    And the urgency has now gone as there are so many deals.

    Back to the OP, while it smacks of some bitter experience the poster might have had, there is a ring of truth about it.

    These companies have a built up a database of people who are loyal to that deal company. not to the retailer who is supplying the service.

    If a business has excess stock, and the price they net out of the deal is better than they can get by running their own local ad etc then its a deal, but I suspect many are fooled into believing that this will be a way to increase their own customer base of repeat buyers.

    Just look at your own buying patterns with these deal sites, confirmed by many of the comments above. The patrons are looking at the deal site for another deal. Not your store.

    But all that said OzB is also a site for the bargain hunter. Loyalty is to the dollars they can save

  • dday on 21/03/2012 - 14:54

    Australian Direct Marketing Association is the way to complain about Group Buying.

  • bb2013 on 21/03/2012 - 22:27
    +1

    Today I was approached by a deal company called Living Social which is also known as JumpOnIt and this is what they proposed: I sell my services for $79 they receive 50% of the $79 as commision to run the deal to cover their costs and they also keep another 25% for refunds….So my business would service these clients for a total of approximately $18 for services worth over $300. They must be KIDDING themselves!!! The presentation was so smooth that it took me over 30 minutes to drag this information from him…..I think this sales rep should have been in politics. If there are other small business owners reading this, just beware that this is the worst and greediest company to do business with that I have come accross in the last 12 months.

    • rack on 22/03/2012 - 09:11

      And this is exactly what i am saying. Businesses should be smart enough to not fall into these arrangements, offer something beyond their affordability and then blame it on the customers for bein cheap.

      Looks like you were smart and just saved your business.

    • voteoften on 22/03/2012 - 19:57

      This sort of thing happens to consumers all the time. Gym memberships, diet companies, dating companies, TIMESHARE (the absolute most evil invention ever), beausty companies. They sell, sell, sell. You gotta say no. The deal of a lifetimee comes along every day.

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