Group Over-Buying: When the 'Deal of the Day' Is No Deal at All

Sara Jones doesn't remember what her first Groupon purchase was, but a year later, she has spent $3,000 on massages, facials, restaurants, hotel rooms, clothing, outdoor activities and food, not only on Groupon, but on other group discount sites like LivingSocial, Plum District, HomeRun, Trubate and Gilt Groupe.

"I didn't even redeem them all. A few expired or I was able to get a refund from Groupon. Some I gave as gifts during the holidays or birthdays," says Jones. "I got caught up in the thrill due to the tremendous savings," she adds with remorse. "I found myself buying things just because the deals were so good."

She has tried to recoup some of that money on sites like Lifesta, which let people sell secondhand deals. "I have posted about 10 of my deals on Lifesta, and have sold about half," she says.

Saving on 'Needs' or Spending on 'Wants'?


Oh, what the Internet hath wrought. A seemingly good thing -- the opportunity to save on purchases -- can now lead to a huge waste of money.

A recent ConsumerSearch.com survey showed that among people who purchased at least one deal in the past year, 68% had purchased three or more deals, and 30% had purchased six or more.
According to a survey conducted for the American Institute of Certified Public Accountants by Harris Interactive, in the past
year, 23 million Americans -- 10% of the adult population -- purchased a coupon from a website such as Groupon or
LivingSocial. It was a nearly even split: About half of the coupons were for items the buyers said they "needed" while the other half were for items they just "wanted." Men were marginally more likely to buy a coupon for a want as opposed to a need, while women displayed the reverse tendency.

"We all love a great deal, and we encourage consumers to pursue any opportunity to save on items they need," noted Jordan Amin, chairman of the National CPA Financial Literacy Commission in a prepared statement. "A purchase though, is always an exercise in prioritization. Spending on too many wants, no matter how great the perceived value, is a lost opportunity for retirement and other savings."

"In the growing deal culture, it's important that consumers take a step back," he adds. "Think through needs, the actual value of the deals and the financial trade-offs that come with spending money instead of saving it. Money doesn't come easily. We want to make sure it doesn't go easily, either."

Buying What's Already On Your List


And, yes, the money can go easily. Jessica Meadows purchases an average of three deals a month, spending at least $150 on massages, facials, and big fun -- hot air balloon rides, helicopter lessons, a NASCAR driving experience and the like.

"I went skydiving for $150 when it normally costs $235," she says. She routinely scores 50% to 70% off the regular price on her splurges. The only buyer's remorse she has had came when she purchased deals that offered a good discount, but still led her to spend more than she typically would have.

"I bought a Donna Karan dress through Nomrerack for $59, regularly $350," says Meadows. "Good deal, but I wouldn't normally buy a dress for more than $30 from a store like TJMaxx or even on sale at a department store." Mostly, though, she says she buys discount buying deals for items she was either planning to purchase anyway, or specific adventure type deals that already appealed to her. "They were on my list of things to do before I die," she adds.

"I don't feel like I go overboard because I manage my deals through organization," says Meadows. "I get what I want and am pleased with the outcome. Yes, I spend money, but it's money I was going to spend anyway, just less, then I don't see that as problem."

Of course, it's not just women who are social buying fans. Dan Guarino was sold on the phenomenon when he scored his first Groupon deal last summer and got a teeth-whitening treatment for $79. "I saved $371 -- amazing!" says Guarino, who has been on the hunt for deals ever since. He has purchased lots of restaurant and spa deals, and just redeemed a coupon for a massage. He too, isn't sure exactly how much he has spent on group buying deals, but estimates it's "well over $1,000" in less than a year.

But like so many other group buyers, he says he, too, has forgotten to redeem coupons, among them a half-off Gap deal and a discount at Bonchon Chicken. "I get pretty annoyed when I forget," Guarino says. He admits he has purchased items he doesn't need. "But I love the deal, and I love sharing the deals with my friends. I'll post deals on Facebook or text them to my friends so they can take advantage of them too."

How to Tame the Group Buying Habit

Financial gurus are all for taking advantage of a real deal. But knowing when to say no, and when enough is enough, is key. Kit Yarrow, author and expert consumer psychologist offers her thoughts. "Ask yourself if you would have sought the product or service if it hadn't come in your mailbox. Add up the cost of all the Groupons your purchased and didn't use. Ask yourself if the restaurant or experience would have been more fun if it was exactly where you wanted to go, instead of the place for which had a Groupon that day."

Mackey McNeill, a certified public accountant and financial planner goes further. "Set a weekly or monthly budget for deals based on your overall spending and income that you can afford to spend from each paycheck on deals. Write it down. Commit to it with your partner."

Get a friend or buddy to assist you, like AA where you have someone to call when you need help, she suggests.

Her other recommendations:

• Commit to a pause. Deals are impulsive, emotional buying decisions and in order to interrupt them you need a pause -- like agreeing to check in with a spouse or a friend or getting up from the computer for 10 minutes before making the purchases, advises McNeill.

• Ask yourself if in 30 days you will be happy that I made this purchase?

• Turn off your Groupon alert/message once you've spent your budget for the week or month.

• Replace one habit with another habit. "If Groupon was a bad habit, give yourself another avenue. If you love deals, allocate $15 a week for a trip to Goodwill or second hand store." Better still, replace your spending habit with a healthy habit. "Walk in the park or go the library with the time you used to spend on Groupon. [If you] interrupt your pattern for four to six weeks, you can unhook," she explains. "The replacement activity/habit is to keep you from feeling deprived."

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pro-brainstrars

DEARS FIENDS & PAERNERS

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May 18 2011 at 6:31 AM Report abuse rate up rate down Reply
Mom

We of course have to be very careful buying like this. So many of the deals sound good but what it amounts to is they make it sound as if you're getting someting better than you are but there are also some genuine deals to be had.
I don't know if this is worthy of an article. Same as every piece of shopping we do, we make sure we know what we're paying for, we make sure we know what we're paying and we make sure we know that what we paid for is what we recieved. If you don't exercise those simple rules you're already getting screwed on a regular basis.

Anyone that would go nuts over-buying groupons would be over-shopping in one form or another, they already have a problem, this is only a symptom.

April 28 2011 at 8:23 PM Report abuse rate up rate down Reply
kd7ccc

We went to a local restaurant using a living social coupon. We went for the lunch special, but was told that when using the coupon, we could not get the lunch special pricing, but could get the same meal for a higher price. The coupon was $15 for $30 in food, but with the higher pricing, we wound up only saving only a few bucks, instead of the $15 we expected. BUT the food WAS delicious and the service WAS great, so overall I'll give it a thumbs up. :)

April 27 2011 at 7:41 PM Report abuse rate up rate down Reply
stu132u

I purchased food coupons for a local restaurant (Cricketeer Arms, an English Pub) here in Orlando, FL through Living Social in February, 2011. I went to use the certificates the first week of April, 2011 - my "mum" is English and I thought this would be a treat for her. The restaurant closed on March 22, 2011 - website shut down, facebook says that they're relocating (Total BS). Living Social says that they are refunding our money - haven't seen the credit yet. Make sure that you're dealing with a business that is reputable. Caveat Emptor!!

April 27 2011 at 6:41 PM Report abuse rate up rate down Reply
Megan

I recently discovered Groupon. The deal of the day that day was two-for-one for a whale watching tour. I've always wanted to go, but couldn't justify spending $30 per person (single mom). $15 per person to take my kids on this adventure, however, I could justify. I took my kids plus one of my son's friend. We saw lots of whales! I bought one extra pair and gave it to my mom as a gift, and she and her friend had a wonderful, whale-filled experience. I bought two more groupons since then, one for my son's birthday--he get's a two-hour trapeze class. The other for 1/2-price wrist bands to ride the rides at Santa Monica when my friend from Omaha visits. I've been careful not to spend more than I can afford, despite the tempting deals. What little I have spent was well worth it! (Just remember, all things in moderation.)

April 27 2011 at 6:21 PM Report abuse rate up rate down Reply
GCoups

I Get most of the Top coupons from c4coupons.com

April 27 2011 at 2:52 PM Report abuse -1 rate up rate down Reply
GrayHatsBeGone

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April 27 2011 at 12:18 PM Report abuse -1 rate up rate down Reply
grayfox994

I bought a deal for 90 golf balls, three rounds of golf, a swing lesson (golf), massage, and an appetizer and drink for $89. Not bad but the rounds of golf had to be played after 2:00m p.m. and the golf balls were delivered one sleeve (3 balls) at a time after you sent in a coupon! That's 30 coupons to be mailed in..lol. Not a bad deal but a royal nuisance to get the golf balls. Be careful about these "deals" as they leave out plenty of details until after you make the deal.

April 27 2011 at 11:49 AM Report abuse rate up rate down Reply
Sonja Dunbar

Dillards has an extra 30% off today and I'll be there!! When they have this extra off you can get stuff REALLY cheap!! But, this isn't the best time of year - best is late summer and late winter when they have the extra 30% or 40% off - major deals!! There sale stuff is pretty picked over now.

April 27 2011 at 11:44 AM Report abuse rate up rate down Reply
buff1999

what irritates me most is these women that they interviewed that just spend, spend, spend (on frivilous things like "facials" and "massages" no less). Instead they could be putting that money away in an IRA and saving for retirement. 40 years from now when they really do retire, they'll have NOTHING saved because they blew everything they ever made on junk deals and impulse purchases. Then they'll whine and cry about how Social Security is their only retirement income and we the taxpayers will have to bail them out.

April 27 2011 at 11:03 AM Report abuse rate up rate down Reply