The Problem With Groupon...3 Reasons Not to Buy

The other night I decided to finally use our Groupon at a local Sushi joint with my family. My 9 yr old actually loves sushi, but my 3 yr old needed some persuasion.

It's important to know that I am anything but a coupon freak... I tend to avoid any coupon or discount club like the plague. I never carry cards around for a free tenth meal and I never sell my personal info to the grocery store in exchange for saving a nickel here or there on milk. I absolutely never pay to play in these schemes...you know the old "$20 now to save $100 later" trick that never seems to add up. Sure, I might pay more than other people on occasion, but I rarely have regrets. In all it is a sum zero game and I don't have to worry about where to put all those membership and discount cards, and I never have to spend time clipping coupons.

Recently everyone I know (including my wife) has been on a Groupon craze. I get emails daily from people saying, "Did you see this deal?" of "Did you buy today's Groupon?". I've read the nightmares of business owners dealing with Groupon, which was discouraging but in some way I figured if they were losing then the Groupon buyer must be the winner. Because of my intrigue with this phenomena, I've been interviewing friends about their experiences with Groupon and I've discovered 3 consistent problems:

1. Overwhelming demand precipitates a backlog of terrible service.

Most companies offering Groupons, do so because they are desperate to increase traffic/demand for their product or service. This means, they are not currently running at full or over capacity. They are comfortable delivering for the slow trickle of customers, and wholly unaware of the flood that will crash down on them as soon as Groupon goes live.

Recently a friend of mine purchased a massage on Groupon from a local masseuse. He spent $35 for what was typically an $80 1-hr massage. Sounded like a great deal, since he had an upcoming triathlon and would surely use it to recover the following day. He bought the Groupon, waited the standard 1-day period before booking his massage, only to find out the masseuse had been so overwhelmed by Groupon that he could not book an appointment for 5 months!

Another friend purchased the Groupon for www.mywinesdirect.com, which offered a $95 case of 6 bottles of wine for $44. She went to the website to redeem her Groupon, only to find that Mywinesdirect.com was also overwhelmed to the point that they had put the offer on hold for 2 days while they sorted out a new landing page on the website to handle Groupon. Moreover, once she finally placed the order several days later she found that her case of wine would not arrive for several months. She's still waiting. If Mywinesdirect.com is trying to be the Zappos of the wine industry, they just blew their chances with a huge volume of potential customers, a la Groupon.

I could continue, but I think you get the point. Any value saved by purchasing a Groupon here, was completely diluted by the unbelievable deterioration of service and timeliness.

2. Groupon users have a stigma.

I've never been in a position where I had to use food stamps at the grocery store, but after using a few Groupons I can surmise exactly how that feels. Wow, I never figured it would be quite such an embarrassing situation. I've used gift cards a number of times and that is nothing like using a Groupon. Let me just spare you the suspense. Business owners have been burned so badly by Groupon that they hate to see you come to their business and use them. Employees know that Groupon users don't tip well and are often overly demanding... and even if that isn't your modus operandi, they will think you are just like all the others.

This brings me back to my sushi story. As my family entered the restaurant, I politely let the waiter know that we had a Groupon. Keep in mind our typical Sushi bill is around $100 and my Groupon was for $30, so I came prepared to cover the distance. I was raised right by my parents and had also prepared mentally to tip on the full amount of the bill, rather than excluding the Groupon portion from my tip calculation. Apparently, most Groupon users are not as well schooled in this area. It was obvious from the first time the waiter came to our table that he was extra precautious and less than excited to serve us as a result of the Groupon. I thought I saw him whispering with the restaurant owner in the corner and point at us a few times. I felt like I needed to keep the Groupon hidden in my pocket until just the last moment when I would sneakily put it in the black folio along with my cash. If you think I'm exaggerating, the restaurant went out of its way to print up a special note along with the bill for Groupon users...spelling out Groupon etiquette. Here is a picture of that notice from my iPhone: 3. Groupon exaggerates the value of its products and services, ignoring other competitive offers.

How many times in the last decade have you paid full-price for an oil change? If you're like me, the answer is never. Every day I get offers in the mail for $10 off, or a Signature service for $19.95... these offers are a dime a dozen. In fact, I rarely pay full price for anything ever. It's too easy to find some form of discount... especially for the types of services or products that Groupon typically promotes. So why are we okay with comparing Groupon rates to the "standard retail" prices? It would make more sense to compare Groupon rates to the average price paid for those goods or services. If you look at it this way, it's easy to see that Groupon is not as remarkable as it seems, and sometimes people actually pay less through other offers.

All things considered, I'm scratching my head as to why people would continue to buy Groupons. I've bought 4 and never quite been satisfied with my experience. Lesson learned.