Sarah Deveau: Money Matters


Are Daily Deals a Good Deal?

Some Deals Not a Deal at All

Last summer I started seeing online touting 50 – 90% off great stuff in my city – restaurants, manicures, event tickets, etc. I started paying them more attention once friends started sharing on Facebook the deals they had bought.

I signed up for Groupon, and then along came Living Social, WagJag, SwarmJam, DealFind, and Kijiji Daily Deals. Recently though, I unscubscribed from all of these lists and now use, which sends me one email daily with the deals from every other company. It’s much easier to deal with, and I can compare deals easily and save them to remember what other similar offers have been advertised.

I love that when I want a pedicure, I never have to pay more than $15 - $20 now. When I want to go on a workout binge for a month or two, I can find a series of boot camps or classes for $2 - $4 per class instead of the usual $15 - $20. These coupon offers mean the disposable part of my income each month goes a lot further.

I have two big concerns about the deals though. The first is that consumers will buy deals they’ll never redeem, or spend money on something they would never have otherwise, but did because the deal was irresistible to them. One of my friends bought a deal for a boxing club, but didn’t visit it first. I bought the same deal, and knew the moment I walked into that gym, filled with teenage boys and dried blood in the sink that she was not going to be using her non-transferable membership!

My second concern is that many businesses have no idea how damaging these deals can be for their bottom line. The deal websites keep a cut of the deal – usually 50%. So the $50 off merchandise you bought for $25 actually only netted $12.50 for the store. Though the margin in a service business is generally higher than retail, most businesses can’t operate with this model. Many believe they’ll earn new, loyal customers, but I’ve yet to return to a business and pay full price for something I got for half off, and I think many others do the same.

Here’s a great article from the Wall Street Journal about just this problem.

Plus, when a business I am loyal to offers a deal I can’t use because I’m not a new customer, I feel cheated. Or I’m stuck in a moral dilemma - when one of my favourite independent retail businesses offered $50 worth of merchandise for $25, I didn’t buy it, even though I would use it. I didn’t like the idea of the store owner, who I like, getting only $12.50 for what I know costs her $25. And yet, at the counter paying for something a few weeks later, I felt like I was being ripped off – had I bought the coupon, I’d have an extra $25 in my pocket.

Finally, I worry about whether I’ll get my money back if any of these businesses in the chain close shop overnight. I’ve been stuck with useless gift certificates to retail stores before, and am hesitant to buy a deal and sit on it – I do redeem them right away.
Do you buy daily deals? Any reservations about them?