Are deal-of-the-day sites too good to be true?

Deal-of-the-day sites (think Groupon.sg, Deal.com.sg, Bigdeal.sg) have proliferated quite recently, and I thought I would give one of them a go since my hair needed a good fix early last year.

Here’s how it works. Merchants release coupons offering attractive discounts (20% to 90%) for their products and services. Consumers clinch what seem like great deals. The deal-of-the-day site takes commissions ranging from 30 to 50% off the selling price. Everybody’s happy? Not quite.

After I made my coupon purchase, I diligently proceeded to make an appointment, still euphoric from clicking the “Buy Now” button. Surprisingly, I had to make a gazillion calls and tirelessly rejig my schedule before finally making an appointment with the salon – three months later.

My first experience with a deal-of-the-day site? A little unsavoury. I was really disappointed. Since then, I’ve heard and read anecdotes on various issues. A trip to Bangkok offered at a discount turned sour when there were additional charges not mentioned on the deal site. The $188 deal then amounted to $426 and did not include a premium airline and a four-star hotel stay as promised! The horror stories are endless.

The premise of deal-of-the-day site is hard to beat: The site helps SMEs pull in more and new customers; consumers get savings and value for money.

So how can this situation be improved for all three parties: the deal-of-the-day site, consumer and merchant? Here’s my take.

1. Enlightenment on the consumer’s part

• Caveat emptor: A steeply discounted product or service and hundreds of new customers – common sense will tell you that the amount you pay determines the quality and value of the product. Also, do take advertising images with a pinch of salt.
• Be mindful of what you’re signing up for. Read the fine print to avoid being taken advantage of. 
• Think about your intention: Are you buying just because the discount is too good to resist?

2. Merchants should look at long-term sustainable goals

• Establish the goal of using deal-of-the-day sites. Are you promoting a new product or attracting new patronage? If you know your objectives, you won’t be breaking out in sweat even if you’ll make a smaller profit or none at all.
• Deal-of-the-day sites are not long-term solutions or boosts for your business, especially for SMEs. First-time customers from deal sites may not come back to patronise again as they are usually coupon or deal hunters. 
• Determine if your business have the capability and resources to properly handle the influx of customers. 
• Dive in with caution and be prepared to make no profit at all. Sites take a commission ranging from 30 to 50%.

3. Deal-of-the-day sites should adopt a win-win collaborative approach with merchants:

• Implement quality control to ensure merchants are able to deliver what they have promised.
• Set an appropriate limit to the number of coupons available for purchase to ensure that your merchants have the capacity to cope with new business and ultimately benefit in a meaningful way from your collaboration.

Still, we should not wholly disregard the many successes of larger businesses and their efforts at promoting their products and services. Many consumers also walk away content with their product or service.

Will I get myself a coupon deal again? Probably not, but with such beautiful advertising and discounts staring at you, you’ll never know.

Chan Hui Ling, Writer, Splash Productions Pte Ltd