Groupon is Not a Lifestyle


As anyone who has compared prices between online retailers and brick-and-mortar stores lately knows, the Internet has been an incredible vehicle for saving money on all kinds of goods. More recently, though, the Internet has also been a catalyst for savings in services too. There are hundreds of websites out there offering legitimate savings on dining, cosmetic treatments, gym memberships and other services but not all of them are created equal, and some of the big names out there might not get you where you need to go.

You may have already heard of companies like Groupon and LivingSocial, which post  daily deals for restaurants, bars, salons, and other local businesses. The voucher offered gives you a steep discount (often 50% or more) off a product or service if you buy it up front.

These sites are enormously popular among people seeking new experiences on the cheap, but can fall flat when it comes to actually supporting a frugal lifestyle. As the name suggests, ‘deal of the day’ sites tend to offer only one or a handful of deals every day. More often than not, you won’t find much that fits well with what you normally do.

Most of the deals on Groupon or Livingsocial are on highly discretionary spending items. In this economy, not everyone is in the habit of routinely eating at fancy restaurants and going skydiving; unfortunately, that’s precisely the kind of discount that seems to crop up on social buying sites most often. Shelling out for these perks still costs money even if you get a discount, so if you’re serious about reducing your day-to-day expenses, going to Groupon or Livingsocial is very much a hit-or-miss proposition.

Moreover, Groupon has a well-documented history of overselling its coupons. Like many other Groupon buyers across the country, you may visit a local business with a voucher only to find that hundreds of other people have also showed up, overwhelming the owners and making it impossible for them to serve everyone. This business model may be good for Groupon’s sales targets, but it reduces the value consumers get out of the deal and often has negative consequences for local merchants as well.

Perhaps all you want is dinner at a restaurant in your neighborhood. Groupon’s deal of the day for yet another Brazilian wax job is not quite the score you need. LivingSocial, meanwhile, has a great deal on… whitewater rafting. What’s a money-wise person like you to do? Go to the competition and see if they can serve up something more relevant!

Some companies, like Foursquare, can get you offers like a free drink delivered to your phone. That’s pretty handy if you’re out on the town.

Another deal site, BigTip, doesn’t even limit you to a handful of deals of the dayâ; has over 200,000 local deals from more than 80,000 merchants already indexed, waiting for you to search for them. Instead of one or a few coupons to choose from in your area, you now have hundreds at your fingertips, vastly increasing your chance of finding exactly what you want. Simply searching for Seattle deals on by entering zip code 98101 gives you results for dozens of restaurants, bars, tourist attractions, fitness centers, retail stores and other local merchants.

Remember, all businesses need to compete for your money, discount sites included. Try a variety of sites to get the best dealsâ”you’ll find that often the best savings and the biggest buzz are not in the same place.

(This is a guest post by Russ Wung, a graduate of the Foster School of Business at the University of Washington.)