Answering my own questions since 2001

Groupon: The Unlikely Firehose of Luxury

Can we talk about Groupon? I’m struck by how rapidly the meme that is the deal-of-the-day site has spread through our culture.

The service is about 20 months old, and they’ve already generated an estimated $350 million in revenue, sold 9.4 million individual deals and been valued at over a billion dollars.

This year’s biggest online hit is an email newsletter offering you coupons. How old school is that?

That’s an interesting notion, but I’m more interested in Groupon as a touchstone for our post-consumer times. Consider recent offers I’ve received:

  • Admission to the Maritime Museum
  • Hot yoga
  • Massage
  • ‘Manly grooming services’
  • Fitness boot camp

Because the price of everything essential is so easily within reach for most of us, we’re ready to spend our money on crap that we absolutely do not need.

77% of Groupon users are women, and I also think there’s a connection to the kind of it-girl celebrity worship that’s so present in our culture these days. People admire Paris Hilton, Kim Kardashian and the like in part because they’re rich, and can indulge whatever urge they desire. Women have become the more powerful consumers in our society, and their desire for luxury goods is piqued by movies like Sex in the City and product-oriented magazines like Lou Lou. Buying Groupon deals provides a way for middle-class people to scratch an upper-class itch.

But, then, so what? If people have money to spend, I’m happier if they’re buying services (which seem to comprise a big chunk of the Groupon offers) instead of more stuff. Services, I’d imagine, are a far more sustainable purchase.

What do you think of Groupon? Is it a great service or does it encourage irresponsible consumerism?

This is the first in at least a couple of posts about Groupon. Next week I’m going to interview a hardcore Groupon user.

Speaking of making sustainable choices, Vancouverites may want to check out Ethical Deal, a ‘green Groupon’.

15 Responses to “Groupon: The Unlikely Firehose of Luxury”

  1. harriet Fancott

    I find all those “deals” exhausting. I’ve always believed it’s better to buy something you need when you need it and pay for it rather than jumping on so called “deals.” Before you know it, you’ve spent five times as much on things you don’t need. I suppose if you have the self-discipline, you can only take advantage of things you actually need.

  2. Marilyn

    I’ll admit, I’m a sucker for the daily deals. I’m signed up to 4 or 5 of them. I’m starting to worry, because once you sign up for one deal, your credit card is on file, making it super easy to buy the next deal. Is it too early to coin the phrase ‘bankruptcy by Groupon’?

    I have also heard that the deals can turn out quite bad for the local businesses. http://blogs.wsj.com/digits/2010/09/30/rice-university-study-groupon-renewal-rate-not-so-hot/ If Groupon doesn’t aim for win-win-win outcomes, they will lose the local businesses, and have nothing to sell.

  3. degan

    Interesting…I have been fascinated by it since it came out and passed up several deals to places I go regularly, just because i was determined not to spend money unnecessarily, but then somehow sailing came up and now I’m a joiner too. From what I’ve heard from various companies, it seems that it doesn’t often encourage repeat business, but rather gives people the opportunity to try something that they maybe wouldn’t have before. Further encouragement for your “luxury” theory…

  4. Annalea Krebs

    Thanks for the shout out about ethicalDeal Darren!

    We are excited to be the first group-buying platform to feature a daily deal on the best green stuff to do, see, and buy in your city.

    We pride ourselves in developing promotions that are specific to the needs of the business in terms of feature details, timing, maximum etc. We also find that our niche drives businesses more loyal customers.

    We’re finding ways to extend our value beyond the 24 hour feature by offering our advertizers additional exposure through our media partners and a free profile on TheChange.com, a local green business directory.

    Here is an article about online group coupon promotions, with some good advice for businesses thinking of participating:

    http://businessonmain.msn.com/browseresources/articles/onlinemarketing.aspx?cp-documentid=25272396&source=msneditorial&GT1=25049

  5. alexis

    I’ve signed up for Groupon, but have yet to register myself for any deal. All it did for me was remind me how little I vary my shopping, and how little I actually shop. I’m not interested in most of the things they sell and I’m not going to drive across town to try them out.

    The one thing that I have found them useful for is as advertising for services or companies I might not have heard about. For example, I heard about onetooth, a yoga clothing company that’s cheaper than lulu. The Groupon ad drove me to their website to check them out as an option. So I’ll stay on Groupon for that reason alone. I’ve only been in Edmonton for 2 years, and it’s sometimes nice to learn about new restaurants/services I might want to try someday.

  6. Andrea

    From what I understand, the companies receive $0 from the Groupon deals. It’s presented to them as a marketing/advertising opportunity. And the companies are told to sell their deals for at least 50% off. So what you’re doing is attracting people who would most likely never buy your services at full price, getting $0 to deliver on the deal, and allowing Groupon to profit from your promotion. This may work if you’re looking to generate buzz about something people wouldn’t normally consume BUT would promote to others — consider deals like tea at the Hotel Vancouver or Big Bus, which gets locals to try something and then encourage visitors to try. But if you’re a lone retailer or service provider, you’re essentially pulling in a bunch of people for a price you can’t afford to give. If you’re going to do it, make sure you structure the deal so that people would also buy other things, such as the reccent cupcake offer that came with 25% off a latte, which at least secured $3 for the shop. But the other deals…yikes.

  7. Lisa

    “…the price of everything essential is so easily within reach for most of us”

    Hmm…
    Not sure about this in terms of the average household income?

    darren Reply:

    What’s a good metric for my claim? I’d say those Canadians living above or below the poverty line. Apparently about 10% of Canadians live below it. I’d argue that 90% qualifies as ‘most’.

  8. Kasey

    I’ve been a long time reader of your blog, and I hate that this is my first post on your blog, but the Groupon ad really annoys me. I find their ad obnoxious. Most of the deals seem like something I could get out of the entertainment book or the Georgia Strait. At least I’m supporting some schools getting the entertainment book. Even if the coupons are of interest to me, because their ads are so annoying, I will never click on it.
    I have to admit, when you promoted it in an earlier blog posting, I was a bit disapointed. But other than that, I love your blog, I look forward to reading your insights and perspectives every week.

    darren Reply:

    Thanks for reading, and sorry you didn’t dig my earlier post. Truth be told, I don’t think I’ve seen any Groupon ads, as I use AdBlock online and mute the commercials on TV. Where do you see them?

    Kasey Reply:

    Thanks for your response! I’m a big fan of your writing style. It’s witty, intelligent and written simply without ever being condescending. Yours is the only blog I read regularly. I love all the random topics you have on your site as well..

    I see their ad all the time.. I better look into adblock.. I see their ad on various fasihon websites and on rfd (which makes sense cause lots of bargain hunters on there) and a few other sites I check periodically like Facebook.
    BTW, I went and watched Glengarry Glen Ross after your review and was planning a trip to NY to watch the other David Mamet play you recommended. I’ll stop now before you think I’m some obsessed fan…
    Just read this interesting (but a little outdated) article. It made me think of something that you would have written about..
    http://www.slate.com/id/2187031/

    Have a great thanksgiving weekend!

    darren Reply:

    Cheers, I’ll check out the Slate article.

  9. amco

    I´m VERY bored by constant and insistent Groupon Ads (via Google ?!?!) flooding my Internet explorer screen. Anyway I can block this tiresome intrusion. Worst case, maybe change from Google, but that´s a war move.

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