Groupon: A Useful Site for Frugal Shoppers

If you’re interested in finding good deals as I am, then you should check out the latest trend in frugal shopping. It’s called group-buying, an activity that has been around for a while certainly, but which is now really popular due to social networking sites that focus especially on making deals available to many consumers at once.

These sites essentially use the leverage of lots of consumers to create good deals. The most popular site that uses the power of group-buying is called Groupon. To give you an idea as to how popular it is, consider this: Google just tried to buy Groupon for nearly 6 billion dollars, according to Forbes, but the Groupon folks turned down their offer! You know if Google is interested, then it’s big.

If you’re unfamiliar with Groupon, here’s how it works. The site contracts with businesses in cities to offer a special group discount to everyone who buys through Groupon. Groupon only offers one deal a day, so users have to wait for the next day if they don’t like the current deal. Also, Groupon uses a pledge system that essentially holds the discount coupon from consumers until a minimum number of people have pledged to purchase the product or service. Once that minimum is reached, the site charges its users and releases the coupon so everyone who purchased it can print it out. By having a required minimum number of sales, Groupon can protect retailers and businesses from losing money. Groupon earns income by taking a cut of the transaction.

So how does Groupon help you? Well, if you take a moment to browse the site, you’ll see that many of these deals are huge discounts. It’s common to see discounts for up to fifty percent off of a product or service. Also, Groupon can help you out because the site often partners with local businesses, so you can take advantage of great savings in your area. For how complicated the entire operation seems, the actual Groupon service itself is really simple: you decide if you want the discount, pledge your payment, then wait to print out the coupon.

Of course, there are a few disadvantages to the service that you’ll want to be aware of. For example, Groupon serves many cities; however, it might not serve your specific city. In that case, you could always look for competitor’s sites. But, with the recent move by Google, we might expect Groupon to significantly expand its area of operation. Another problem with Groupon is that it has been criticized for actually taking advantage of the power of group buying to negative effects on retailers. The Gap lost, according to Mashable, nearly $7.5 million during a nationwide promotional sale through Groupon. Other retailers, such as Posie’s Café in Oregon, have also reported losses, especially because Groupon does not put a cap on purchases.

Groupon is a great resource for frugal shoppers, certainly, but it can also have its problems. If you’re interested in the service, give it a try, but also do some more research to see if it’s right for you. Remember, frugal shoppers are still a part of a community, especially if they patronize local businesses. Spending your money wisely is the hallmark of a frugal shopper.


This guest post is contributed by Barbara Jolie, who writes on the topics of online classes.  She welcomes your comments at her email Id: [email protected]