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Are Daily Deal Sites Like Groupon Still Worth It?

Discounts have shrunk, but you have more time to use them. Here's how to score the best bargains.

posted by Caroline Mayer, September 30, 2013 More by this author

Groupon and LivingSocial sites

Caroline Mayer is a consumer reporter who spent 25 years working for The Washington Post. Follow her on Twitter @consumermayer


Groupon and LivingSocial sites
From Groupon.com and LivingSocial.com
Somewhere on my desk, in that growing stack of papers I’ve designated as my “to deal with later” pile, rest two Internet group-deal coupons for two restaurants.
 
I can still use one of them, but only for the amount I paid — $10 — not the $20 deal the coupon would have been worth had I used it within six months. The other one is worthless; the restaurant went out of business.
 
I probably should have thrown that coupon away, but I keep it to remind me that as tempting as many of these deals may sound, I need to think twice before I click and buy another one.
 
Two Questions About Deal Sites
 
My situation, which might sound familiar in your home, raises two questions: Are daily deal sites still worth using? And if so, what are the best ways to use them wisely to snag the juiciest deals? I’ll answer both shortly.
 
(MORE: When a Supermarket ‘Deal’ Is No Deal at All)
 
Clearly, I’m not the only daily deal dropout. The two dominant sites — Groupon and LivingSocial — are struggling to live up to their initial promises and attract customers.
 
Call it deal fatigue. Groupon, LivingSocial and their many imitators went overboard, flooding consumers’ email inboxes with deals of 50 percent or more that disappeared after 24 to 36 hours.
 
Not only did customers tire of the deals, some got burned.
 
When ‘Deals’ Aren’t Deals
 
For instance, according to the Consumer Federation of America’s most recent report on top consumer complaints, one San Francisco-area day spa “overextended its capabilities when it offered coupons for massages at half price. The response was so overwhelming that the business could not accommodate everyone and closed shop.”
 
More often, customers around the country have found their group discounts weren’t as big as advertised.
 
(MORE: 7 Ways to Travel Smarter, Cheaper and More Often)
 
The Daily Deal Media, for example, recently slammed LivingSocial for promoting a 64-percent-off deal on a VHS-DVD converter cable. Although the $25 coupon accurately represented the price cut from the etailer selling the cable, several other sites were selling the product for as little as $15 — and Amazon offered it for $10.50, less than half the LivingSocial deal.
 
Similarly, the Huffington Post in September took Groupon to task for selling $18 tickets to New York’s Metropolitan Museum of Art. That was a $7 discount from the museum’s “recommended” entrance fee and more than 1,000 people snapped up the “deal.” But as Huffington Post pointed out, you can enter the Met for free if you want (or, perhaps more accurately, if you insist).
 
How the Sites Have Changed
 
Lately, Groupon and LivingSocial have been revamping their sites, hoping to lure back disillusioned customers.
 
They’re expanding the types of deals and offering a lot more products in addition to such services as meals, massages and travel.
 
And they’re lengthening how long the deals remain available, from the initial 24- to 36-hour window to two weeks or more.
 
LivingSocial also just announced plans to let you search for discounts on its website and mobile app any time you want, hoping to transform the deals they dangle from impulse buys to everyday bargains.
 
(MORE: Senior Discounts Aren’t Always the Best Deals)
 
What does this all mean for you and me?
 
For one thing, it may lead to a more cluttered email inbox. At least mine feels that way. I now seem to get at least three Groupon and LivingSocial emails a day, not to mention coupons from local sites.
 
“You can still find some good deals, but you have to be more judicious as to what you select,” says author Ellie Kay, who calls herself “America’s Family Financial Expert.”  (Her newest book, Lean Body, Fat Wallet, will be published in December.)
 
Initially, Kay says, there were some good deals, with savings of about 50 percent. More recently, she notes, they typically offer discounts of just 10 to 15 percent. “I don’t buy them nearly as often, she says.
 
“The bloom is off the rose," says Jody L. Rohlena, senior editor of ShopSmart, a shopping magazine from Consumer Reports. "But if you’re smart and cherry-pick the deals, you can save a good amount of money.”
 
Stephanie Oswald, founder and editor of Travelgirl magazine, notes that Groupon Getaways and LivingSocial Escapes sometimes tout excellent travel deals.
 
5 Tips to Score the Best Deals
 
But before you plunk down any money to a daily deal site, follow these five tips from the experts:
    
1. Stop and think before you click “Buy.” Ask yourself whether you’d really want to patronize the particular establishment and, more important, whether you’d do so before the deal expires.
 
If you don’t know the retailer, restaurant, massage service or whatever, spend time at its website to determine whether you’d otherwise choose to become a customer. Visit consumer-rating sites like Yelp to see what others have said about their experiences.
 
2. Read the fine print to discover the true savings. Often, shipping and sales tax are not included on products. Neither are tips or alcohol at restaurants. And in many cases, expiration dates have been shortened. Typically, they used to be six months; now they’re often just two months.
 
3. Look for the “gotchas.” Many restaurant deals, for example, are only for limited menus with offerings that may not interest you. Some may for lunch only, which could be a problem if the restaurant is miles away from your office.
 
4. Be wary of the percentage-off claims. Often the advertised sticker price that the discount is based on is higher than what other retailers are actually charging. The other day, for example, Groupon was pushing a Wi-Fi digital camera for $135, boasting the price represents 60 percent off the $330 retail cost. But Amazon was selling the same camera for $145 and, a day later, dropped its price to $109.
 
5. Finally, if you spot an alluring daily deal for a product, do some online price comparisons. Open another browser window and search to discover who else is selling the same (or a comparable) product and at what price. As the camera story indicates, you may well find a better deal.