Small businesses and consumers turning on Groupon

Coupon sites such as Groupon and Living Social offer consumers ways to save serious cash on purchases. However, a growing number of businesses and consumers are coming to question the value of such sites, which have become stock market darlings.

The fine print strikes again on Groupon

A lot of people have signed up for and taken advantage of Groupon. However, according to Reuters, not all Groupon users are thrilled with the coupons that are made available. A growing number of complaints are being made to the Consumer Federation of America, a consumer advocacy organization, and also on SiteJabber.com, a consumer review website, that the coupons made available by Groupon and LivingSocial are becoming excessively bogged down by fine print, like requiring additional purchases or sudden expiration dates. SiteJabber lists both sites as being “not recommended.”

Businesses less than thrilled

According to DailyFinance, research by Rice University professor Utpal Dholakia found that 21.7 percent of all Groupon coupons go unused after consumers pay for the coupon, and less than half of business owners who offered coupons through Groupon would do it again. According to CNN, he also found that less than 20 percent of users returned to the site after using a coupon.Merchants will offer their goods or services for 50 percent off or more through coupon sharing sites, but the cut that LivingSocial and Groupon demand for the privilege of offering a steep discount to customers is often from 30 to 50 percent of each sale involving one of their coupons. Exposure through LivingSocial, Groupon or similar sites can mean some high volume for businesses, but selling things for less than half of normal retail price means a retailer can lose a lot of money by placing a coupon on such sites.

Coupon craze

There has been a lot of attention over the past few years devoted to coupon use, and even television shows such as “Extreme Couponing” on TLC. Coupon sites, especially those that require the user to pay for the coupon, should be used with some caution, as LivingSocial does not offer refunds, according to USA Today, and Groupon only grants refunds on a case-by-case basis. A person should only purchase coupons that they are likely to use, and should check for any and all fine print that is available before they do, lest they buy a coupon for “half-off a haircut, with purchase of $13,000 in hair product and a Ferrari.”

Sources

Reuters

Daily Finance

CNN

USA Today