Is group buying really a good deal?
- 5 February 2011
- From the section Business
Group buying websites have been around for a couple of years now.
They offer daily deals in your local area, sometimes up to 90% off the normal asking price.
Now big names like Facebook and Google want to get in on the act too, but are they really as good as they promise?
The way they work is simple.
You sign up for a free daily email, and get heavily discounted offers from local businesses.
The emails are free, and you only put your payment details in once you find an offer you like.
The items range from male grooming and deluxe food hampers, to laser hair removal and GoKarting.
Groupon is one of the major names in this field.
It is said to be the fastest growing company ever, with five million users in the UK alone.
If you are tempted by a Groupon offer, you enter your payment details online and wait.
Once a minimum number of people sign up the deal is confirmed and a voucher is sent to your inbox.
Christopher Muhr, managing director of Groupon UK, says the company works hard to secure bargains.
"We have whole departments doing nothing else but price comparison, and they sit down and analyze every deal down to the last detail," he says.
"And we make sure that on that day the deal's running, it's the best and unique offer you could probably have."
Groupon has had some problems.
The Advertising Standards Authority (ASA) has banned some of its adverts for being misleading.
The company dismissed this as "growing pains", and say it is working with the ASA to make sure it sticks to its guidelines in the future.
Some customers also report problems redeeming their vouchers, or bad customer service from the retailers.
Christopher Muhr says the company is aware of the problems, and is working to sort them out.
"I think we've found very innovative ways of tackling this - by scanning forums, making sure anyone who is not happy with Groupon gets an immediate refund," he says.
"At the same time, we work very hard with the partners to sort out the problems on site."
Groupon has plenty of rival sites to contend with.
LivingSocial, Groupola and kgbdeals are some other names who work along a similar idea.
Groupon advertises offers at up to 70% off normal asking prices. Some of its rivals promise 90% discounts.
Shops, restaurants and other retailers that partner with these sites have to take hefty price cuts. But it means they have instant access to a whole new group of customers.
And now, bigger names are joining in. Facebook has just launched its own version, and Google is looking to do the same.
A spokesman said: "Google is communicating with small businesses to enlist their support and participation in a test of a pre-paid offers or vouchers programme."
"This initiative is part of an ongoing effort at Google to make new products that connect businesses with customers in new ways."
So customers can take their pick from any number of websites.
Whichever one you use, you need to know exactly what you are getting for your money.
Personal finance expert Sarah Pennells says it is important to read the small print, and think carefully before you put in your payment details.
"You can definitely get a bargain, but the main thing to ask yourself is whether it's money you would have spent in the first place," Sarah says.
"Most of those offers are for treats.
"So if you're spending money you weren't planning to spend, or money you can't afford, it's not really going to end up being a bargain at all," she adds.
It is worth knowing your rights too.
When you buy online, there is generally a seven-day "cooling off" period.
If you cancel in that time, you are entitled to a full refund.