Group Buy Sites: The Benefits & Pitfalls

 I am a member of 2 group buy sites: Living Social, and Grabone. I would be a member of more except a lot of sites don't service Canberra (and I haven't had time to look at any Perth deals yet). I am NOT an active member of Groupon because of their shocking customer service and dishonesty - I will post separately about this.

I am always weary of buying group buy deals after reading forum page upon forum page of horror stories – restaurants not honouring the vouchers, not allowing voucher bookings, rude and sloppy treatment at beauty salons if you are a voucher customer etc. 

I personally have bought quite a few vouchers, and have mostly had success in using them. Amongst my favourite have been macaroons and petits fours from a patisserie, coffees, cakes and a book voucher for Beyond Q and a meal and drinks at Soi 8 which was delicious, and to where I'll definitely return.

The real problem is, you're at the mercy of the retailer offering the voucher. If they decide to change the terms and conditions or refuse to honour the voucher, there's not much you can do. Sure you can complain to Fair Trading about the individual retailer, but that won't get any results- they're already inundated with complaints relating to group buy websites.

What really needs to happen is that the group buy website should be obligated to refund you if the merchant won't honour the voucher. I recently had this situation and Living Social gave me credit for the voucher in the form of "deal bucks", redeemable on any purchase from the site. I was happy with this because I plan to buy more vouchers, but there should be an option of a credit card refund for people who don't want to do that. 

On 2 November 2011, the group buying websites in Australia launched a voluntary code of conduct. The code basically states that its members (which include Living Social, Spreets, Cudo, Groupon etc)  must do all they can to ensure that advertising of deals is clear and accurate, that terms and conditions are clear etc. They are also supposedly going to take extra steps to inform their merchants about their obligations under the law (that they have to provide what was advertised, etc). Although these are steps in the right direction, you are still dependent on the individual merchant to honour the deal, and who knows whether the group buy websites are doing anything much to help.

My tips / some traps to avoid.....

- I have found that quite often, retailers don't stick to the T&C of their offer. For example, the voucher might not have any exclusions of meals you can choose but upon arriving at the restaurant, you are provided with a limited menu from which you can choose. Until there is reform in this area, there isn't a whole lot you can do. My tip is to not be too fussy, and if the retailer does the dodgy then you'll just know not to return.

- Think twice before buying a voucher. The time urgency, and limited number of vouchers available might play on your mind and result in you buying goods or services that you really don't want or need. I have been caught out not having the time or inclination to use a voucher, thereby forfeiting the monies paid for it.

- Check and double check the expiry date and conditions of use. Will you have time to use the voucher? Is it only valid on certain days or at certain times?

-  If the terms and conditions are ambiguous and you're not sure exactly what extras you'll have to pay for (as I have often found to be the case with car service deals), don't buy. If it looks too good to be true, it might well be. An alternative would be to phone the retailer before buying the voucher and finding out in more detail what they are offering.

- Use the voucher ASAP. There have been forum posts about restaurants only allowing a certain number of voucher bookings per day, giving voucher holders the last dibbs on availability, not having any availability etc. If you use it sooner rather than later, or make a reservation ASAP, you're less likely to have issues in this space. Of course, some places will readily accommodate you at any time you want.

- You are always taking a calculated risk in buying these vouchers. If you're risk averse, buy deals from well established or well known institutions that are less likely to rip you off.

- Delete your credit card details. I hate how Living Social saved my credit card details on file, and I only had to click one button to purchase a deal. I was worried that I would (a) accidentally click the buy button, or (b) that someone would hack into my account, and get my credit card details. The other bonus about deleting your details between purchases is that it makes it harder for you to buy, so you're more likely to think twice about whether the deal is really a good idea.

- Don't pay too much attention to the stated value of the deal. Quite often the retailer will find a sneaky way to overstate the value of the goods or services you are buying. Just be happy overall with the price, without needing to compare it to the "real" value. The discount is likely to be an exaggeration, even if this is illegal.

- Don't place too much reliance on the timing of use of a deal. If you only want to use it on one weekend, and they can't fulfill your request on that weekend, you're likely to be dissapointed. I have found that some places are very flexible about the use of vouchers, others not so. 

- If you missed out on an offer from a national retailer in your state, check if it’s still available in others. For example, a national movie ticket allocation for sale on the Sydney website might be sold out, but you can still buy via the Melbourne website.

It boggles the mind that some retailers choose to list their products or services on a group buy website (which is a longer term marketing tool, not a short term profit making one) and then are nasty to customers - the number one thing to avoid if you want people to return, spread the word etc. 

I think that some smaller retailers are overwhelmed by demand, and regret offering their services so cheaply... but there's really no excuse for retailer stupidity, and the customer shouldn't suffer. I know that some deals are cut off after a certain number of vouchers are sold; retailers should use this option if in doubt as to their capacity to fulfill a large number of voucher related orders.

There is no excuse for poor customer service, shady practices or the delivery of inferior goods or services simply because someone has a voucher... I think that eventually the ACCC will have to clamp down on group buying sites to stem the flow of complaints, but in the meantime, it's buyer beware.