Group buying services have caught on like wildfire in this last year, with deep discounts such as Groupon’s offer for 50 percent off at the Gap attracting consumers looking to save. And these deals sites don’t just sell coupons for clothes; discounts are offered on everything from a pair of jeans to skydiving lessons. Another major player, LivingSocial, features vacation packages and city-specific outings. Best of all? New deals on goods and services are added to these sites each day.
The reason Groupon and LivingSocial can offer these spectacular deals is because they work with local and national companies, offering access to millions of customers in exchange for a cut of sales. Merchants can use the deal as promotion, offering a deal at or below cost as a way to get new customers in the door. There’s a heavy emphasis on local deals, such as half off at neighborhood restaurants, but both companies also offer deals at national chains or online merchants from time to time.
Groupon promises merchants a minimum number of customers, so a promotion only takes effect after a certain number of people sign up for each day’s deal. This actually helps turn customers into marketers, since anyone who really wants a deal to take effect will likely help promote the bargain to their friends via Facebook, Twitter, e-mail, or word of mouth. LivingSocial deals don’t have this sort of tipping point requirement, but instead offers customers incentives for getting friends to sign up.
Both Groupon and LivingSocial offer deals through their websites, e-mail alerts, and mobile apps. There’s nothing stopping you from signing up for both services, since you only pay for the deals you want. However, if you’d rather not keep up to date with two daily deal sites, we’ll help you decide which service is best for you.