Groupthink: Grading Group Discount Websites

If you've seen the ads along the side of your Facebook page asking you to sign up to get the latest daily deal, you've probably figured out that a new phenomenon is afoot. It's propelled by the power of the group buy.

These websites promise businesses an incredibly high volume of customers and in return, the customers get a huge discount on the offered product that's somewhere in the neighbourhood of 50% to 90% off

However, there's a catch. (Of course, there always is) In order for the offered deal to be valid, most of these group discount sites require a minimum number of people to buy the deal before the discount is activated for everyone. On top of that, the opportunity to purchase the deal is limited to one day. Following that, the deal expires and then the next deal is put up for grabs.


But isn't that a heavy financial risk for the consumer? Normally it would be, but if you are unlucky enough to buy a deal that dies because of lack of interest, your credit card is not charged. (at least by the sites featured here) Also, the time limit to get the deal is only the window you have to buy it, not to use it. The coupon that is subsequently e-mailed to you has its own restrictions for use, but they don't typically expire within the year they are received. Don't worry, you don't have to run out to frantically use the coupon in a day.

Since there's so many of these group-buying companies out there, we want to grade their ability to fulfill the other half of that coin, promising deeply slashed prices to potential customers who buy in. Each site will be given a letter grade based their presence in Canada, whether they have a time limit or minimum buy-in restriction, the quality of the perks given for sharing the deal with others and finally, the overall look and popularity of the site itself.


Groupon
Welcome the O.G. The original group buy site that started the whole swarm buy craze in 2008. With by far the widest city base around the world, represented in 93 cities across North America and 23 countries internationally, their distribution network has yet to be equaled by competing sites -- many of which are still getting established. The daily deal is only valid if enough people buy it, but their reach is large enough that such a scenario doesn't happen with frequency. Still, when such a thing does happen, your credit card is not charged, so your risk remains at zero. The deals themselves are good quality, ranging from 50% to 90% off massages, meals, tours, wine tastings, gym memberships, rock climbing lessons and just about anything else you can think of. Plus, you get $10 for every person you refer who buys their first deal. Sounds excellent right? Yes it does, unless you're Canadian. Though it has big representation everywhere else, only Toronto, Vancouver, Ottawa, Calgary and Edmonton are listed.

A - Can't give this one an 'A' or an A+ in Canada because it's not yet in enough cities. Given its reach and popularity in the U.S. and around the world, the lack of Canadian content seems rather unfair. If your city has it though, it's fantastic. Getting the minimum number of buyers isn't a problem because most people have heard of Groupon and the variety of deals is unprecedented. Plus, you get $10 for every person who buys their first deal at your suggestion, which is a higher payout than anyone else can offer.

WagJag
Note to WagJag developers: the fact a name rhymes, does not make it cool. Evidently, a WagJag is what their daily deal is called and those who take part are called WagJaggers. (yeah, lame!) At least this site is 100% Canadian with Durham Region, ON as well as London, Barrie, Ottawa, Toronto, Edmonton, Calgary, Winnipeg, Halifax and Montreal among its daily coupon cities. Again, the deal is only valid if enough members buy in and if they don't, your credit card is not charged and you don't get the e-coupon. There are a few deals offered a day and most of them are pretty unique, such as a beer tasting course for $37 (reg. $110), discounted tickets to Second City for $15 (Reg. $29) and two hours of handyman service for $49 (reg. $168). The site tends to move beyond the typical food and spa deals of its competitors and as many coupons as you want can be given away as gifts. Even if you don't sign up at all, there is still a section full of jokes and funny YouTube videos to make you smile. Oh, and the name was coined by scientists in the 1970s who were studying underwater ant colonies in the coral reefs off the cost of Wagjagistan and noticed ants would get supplies from a place the scientists dubbed a "WagJag." Okay...they're joking, right?

C+ Though the name sounds like code for a sex act, the deals are very unique to the city that they originate from. There's a healthy number of Canadian cities, but there's also a minimum buy in required for activation. Good thing your credit card isn't charged, but not getting the deal is a bummer, especially with no incentive for sharing. (The site advertises something called WagJag bucks, but that page is blank) It's reach and popularity is also questionable.

GroupClick
Based out of Toronto, the emphasis here among Canadian cities is in Ontario, since this is the first destination on the list with daily deals for Hamilton and Mississauga, It is also the only site to feature Quebec City along with all the usual Canadian suspects listed on the entries above. They've also expanded into the U.S. with 39 American cities. GroupClick separates itself in that there is no minimum amount of buyers that need to activate the coupon. However, you only have 24 hours to purchase that day's deal from the site. Like other sites, many coupons have an expiry date, but you don't need to use them the day you receive them. Deals include $75 fitness classes for $20 or two hours in a golf simulator, with club rentals for $30 (reg. $100). The deals are generally limited to meals, lessons and spa treatments and the website isn't exactly eye-catching. Yet, the site also pays a variable percentage displayed on each deal to "GroupClick Ambassadors." These are people who register with the site and paste a link to the deal of the day on their website or Facebook page. For every person who clicks on and buys the deal from the ambassador's link, the ambassador gets a cheque on the 15th of every month. The example used on the site is $50 worth of food for $20 and out of that $20 the ambassador would get $8 for every click. Sounds good, except the site reports only 18,110 vouchers purchased at all, so the chances of you cashing in significantly seem slim.

B - Though it has many smaller Canadian cities that don't often get attention from crazes or marketers, the concentration seems to be in Ontario and Saskatchewan or most of the Atlantic region are noticeably absent. However, it doesn't require a minimum amount of buyers, yet the deals seem like ones that you would expect and the look of the site is very drab. Still, the "paying you to play" incentive gets it a marginal B.

Steal the Deal
Steal the Deal features the largest number of Canadian cities on a group buy site. The 16 cities feature those not seen on other competing websites, like Kitchener-Waterloo, Oakville, Guelph, Regina and Victoria. The only American city is Buffalo. Though this site also has an e-mail notification feature, you must register with the site in order to start using the deals. There's no minimum "buy in" number before the coupon is redeemable, but they are given out in limited quantities for 24 hours, like GroupClick. As with other group purchase sites, the terms and redemption period of each offer are prominently displayed on the home page and the offers themselves are varied and unique such as, the opportunity to play in an indoor playground and get one round of mini golf for $2.00 (reg. $6.00) or $29 for a normally $60 dinner theatre ticket in Niagara Falls. Though there seems to be no incentive for sharing the deal, you ask a question about the terms of each deal and they are answered quickly and displayed under the deal for everyone's benefit.

B+ Perhaps the best of the purely Canadian sites due to its unequaled volume of participating cities in the country. In addition, the instant Q&A customer service helps ease any skepticism people may have. Plus, there is no "buy in" minimum for the deals to work. However, it remains an unknown quantity in the wider population, which could limit the variety of businesses that participate in the future, due to a possible lack of customers.

At Cost
This site mainly caters to Americans, but features cities in the UK and Australia, along with a list of six major Canadian cities: Ottawa, Toronto, Vancouver, Montreal, Halifax and Calgary, Despite it's limited number of Canadian cities and the requirement of at least ten buyers before the deal is activated, most deals are active for longer than 24 hours and the price you pay keeps falling until time expires. (Don't worry. if you buy before the price drops, the site assures that you still pay the final lowest price.) In addition, you get a further discount for every person you share the deal with without them having to buy it. The example given is $0.10 knocked off the price for every one person the deal is shared with.

A + Even though the site only has six Canadian cities, the opportunity for further discounts without friends having to buy, the longer deal shelf-life on the site and the falling price throughout the day, pushes this site over the edge.

TeamBuy
TeamBuy is based in Canada, but only hosts deals for six Canadian cities. (Ironically, the same city roster offered by At Cost). Their deals are the typical 50-90% off, but seem much more geared towards a unique "tourist in your own city" experience. For example, $115 for a $200 three-course meal for four and tickets to a Blue Jays or Argos game or $25 for a $55 unlimited go-carting pass. TeamBuy requires a minimum number of buys to be active, which is dangerous in this case because the site only reports 27,458 total buys in their year history. It is not as popular or widespread as something like Groupon and with these types of sites, a larger following helps activate the buy faster, or at least increase the chances of an active buy. Sometimes, as in the case of the three course meal, the discount is actually below the advertised 50% off minimum.

C Only host to six Canadian cities, but without the deeper discounts and longer deal periods of At Cost that make it worthwhile in other ways. Though the deals are unique experiences, it's popularity is questionable and it's not guaranteed that you'll make the minimum buy-in every time. There is also no incentive for recruiting as other sites have.

Living Social
Living Social is soon to be represented only by Toronto in Canada, but I had to mention it here because it's the most heavily promoted group deal site next to Group On, especially on social networking sites. Their unique take on the group buy phenomenon is that once three people use your link to buy the deal, you get the deal for free. As a company, they mainly rely on their original status as a Facebook and iPhone app to promote their deals, so posting their link on your profile page may help increase your chances of getting that free deal. The iPhone app will also help you get deals on the go, but since the site is in its infancy in Canada it's yet to be determined whether retailers and the population will embrace it to a level of critical mass.

IC I can't give these guys a failing grade because they have yet to dip their toe in Canadian waters. To give them an F before they get started seems like dirty pool. As a result, they get an incomplete, or, what my teachers use to call the "wait and see" grade.