Should You Buy A Groupon, Or Just Call The Merchant?
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Money in the 20s is a blog about personal finance, investing, the economy and business school. |
“We’re going to the beach next month,” one of my friends told me over lunch a few weeks ago. When I asked her where she was staying, she told me it was a swanky new hotel I’d just seen featured on Groupon. “Oh, so you bought the Groupon?” I asked, assuming her answer would be the affirmative. But you know what they say about people who assume… turns out, my friend hadn’t taken advantage of the offer posted on the daily deal site. Instead, she’d worked to get her own bargain.
How Daily Deal Sites Work
Groupon isn’t the only name in the world of daily deal sites, but it is the biggest and the oldest. Like competitors such as Living Social and Deal Chicken, Groupon acts as a middle man between businesses and customers. The ideal result is that the business gets a slew of new customers, those customers get a great deal, and Groupon takes a hearty cut (typically 15% of market value).
The Caveat For Merchants
But if those new customers don’t become return customers, then the benefit of the Groupon experience from the merchant’s side of things isn’t always ideal. Instead, they may find themselves having to honor dozens of vouchers purchased at a steep discount, only to see patrons take their business elsewhere in the future. Under this less-than-ideal scenario, merchants may actually lose money in the whole transaction.
Take Advantage Of The System
Back to my friend’s story. When she saw that this new hotel was offering a deal on Groupon, she seriously considering purchasing it. But first, she called the resort itself to see what sort of deal they could offer her directly.
To buy the Groupon, my friend would have had to spent $125 for a two-night stay at the hotel, which usually would have cost her $250, a savings of 50 percent. She knew it was a good deal, but was surprised when the hotel offered her an even better one. They told her they could give her those two nights for $100, a savings of 60 percent. She forgot all about buying that Groupon, and booked with the hotel over the phone.
How’s that a deal for the hotel? Well, had my friend bought through Groupon, she’d have spent $125 while the daily deal site would have collected $37.50 for the transaction (there’s that 15% cut we talked about earlier). That would have left $87.50 for the hotel. Instead, their direct offer gave my friend a steeper discount than she’d have gotten from Groupon, and gave the hotel an additional $12.50 in their pocket. On top of that, my friend got the satisfaction of scoring the deal on her own – without Groupon’s help – while connecting on a more personal level with the hotel, a fact, she told me, would make her more likely to return to the resort in the future.
Reader, have you ever bypassed a daily deal site like Groupon or Living Social to get a better deal on your own directly from the merchant?
