Creighton Holley graduated from SMU in December. Since then, he has rented a pontoon and jet skis, purchased tickets to a drive-in Movie Theater, enrolled in a course to obtain a concealed handgun license and set up a skydiving appointment-all thanks to Groupon.
The booming online company operates on a deal-of-the-day concept, offering consumers gift certificates for up to 90 percent off local services and products. The website launched in November of 2008; Groupon went public by November of last year.
College students and young adults are largely to thank for the company’s skyrocketing success. According to data from comScore, an online audience-tracking company, 18-24 year olds are Groupon’s largest group of consumers. Like Holley, many students are drawn to the website in search of new, exciting pastimes. But for most consumers, Groupon’s main attractions are the deals.
“I feel like a lot of the time, I’m just excited about the deal,” said Amy Crowe, also a December SMU graduate.
Crowe is not alone. Dr. Daniel Howard, a marketing professor at SMU, said consumers have an increased tendency to buy something just to get a good deal. Consumers think, “I can’t pass up such a great bargain,” Dr. Howard explained.
“For those reasons, it [Groupon] can actually cause you to spend more money,” Howard said.
Both Holley and Crowe admit they have made some unnecessary Groupon purchases. When Holley first started using Groupon, he spent up to $300 per month. He soon realized many of his coupons had expired or he simply didn’t need to use them.
Mike Alberts, a senior at SMU, had similar issues. Alberts purchased Groupon certificates to yoga studios, cleaning services and a gun range-purchases he would never make otherwise.
Today, Alberts said he has stopped using Groupon altogether.
“I realized I really needed to stop wasting money,” he said.
Crowe and Holley still check Groupon every day, but say they have learned how to use the website more effectively.
The first step is making purchases for items or services that are actually useful or necessary. Crowe said movie tickets are one of the best buys because she saves 50% off a purchase she would likely pay full price for in the future.
Holley is a strong advocate of using Groupon not only to save money on activities he already participates in, but also as an outlet to find new activities.
“It’s more about what I’m getting out of the deal than how much money I’m saving,” Holley said.
However, even he admits there is a limit to how useful the coupon may be. Holly said it is important to look at all of the fine print about the products or services and the limitations of the specific discount before making a purchase.
Crowe learned that lesson when she bought a massage without looking up the company online. The massage studio ended up being a long distance from her home in an area of town she wasn’t comfortable visiting.
“Since then, I’ve learned not to buy something on the fly without researching the company and where it is located,” Crowe said.
But it’s not the end of the world if you do make a bad purchase. Crowe and Alberts praised Groupon for its excellent customer service. If you do have a bad experience with one of the retailers on the site, Groupon will refund your purchase. Crowe got a refund for the massage she didn’t want to use in the form of Groupon bucks to use towards future purchases on the website.
With such risks out of the way, smart consumers can actually take advantage of Groupon’s deals. Dr. Howard said consumers who are able to control their shopping impulses can actually save money using Groupon. However, for those consumers who are highly susceptible to impulse buying, it’s best to stay far away from the website’s daily dose of deals.
