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Deep discounts ripe for the taking on group-buying sites Add to ...

Like many group-buying aficionados, Lori Godin sure likes to boast about her latest conquests.

Through the popular sites Groupon, Living Social and WagJag, she said she's scored $32 worth of pizza for $3.20, $15 worth of frozen yogurt for $2 and loads of discounted goodies from Chapters.

"It fits in well with my philosophy that being frugal doesn't mean that you have to buy less. It just means being an informed shopper," Godin, a 26-year-old work-at-home mom and blogger in Edmonton, wrote in an email.

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Group-buy sites will email users daily promoting a deal near where they live. If enough people purchase vouchers in a set period - $20 for a restaurant meal worth $40, for instance - the deal becomes active. The sites collect a commission, with the rest of the money going to the merchant.

Amy O'Shea, a 35-year-old from Maple Ridge, B.C., scours the 20-odd group-buy emails that arrive in her inbox every day for opportunities to pamper herself.

"It's my sanity time," said the mother of four children, all under eight years old.

So far she has treated herself to a day at the spa for $40, and plans to do so again with her mother-in-law on Mother's Day. Most recently she and a friend got Brazilian waxes, regularly priced at $65, for $19.

"It should be free as far as I'm concerned. It was painful," Ms. O'Shea said with a laugh.

James Vettese, group marketing director for Toronto-based site WebPiggy.com, said the vast majority of the site's users are women. He said social media has been driving the one-year-old site's popularity.

He recalls one recent deal - $50 for $150 worth of food at an organic butcher shop in Toronto - that lit up micro-blogging site Twitter.

"It was very exciting to watch all the re-Tweeting going on about this deal all weekend," Mr. Vettese said.

"We're not giving them any incentive to do this. They're just doing this on their own."

Steven Zussino is president of Grocery Alerts Canada, a site that highlights grocery deals and posts product reviews. He's also avid user of group buy websites. He and his wife track their coupon savings and have saved $450 this year alone. Recently the Victoria couple enjoyed a fancy seafood dinner for half price on a trip to Seattle.

There have been some setbacks, though. Mr. Zussino wanted to use a Groupon for a haircut at a specific salon, which ended up having a month-long waiting list. When dining with another couple recently, he found out after the fact the establishment would only accept one Groupon per table.

Sally Eden manages blogs at Smart Canucks, a website for deal-savvy Canadians that even includes a message board dedicated to bragging about bargains.

Ms. Eden said she is a big fan of Groupon because she gets a $10 credit for every new user she refers to the site. So far she has enjoyed a hot-air balloon ride in Florida, taken advantage of a wine-making deal, and has found a hair stylist she liked enough to visit again.

"I have a lot of fun with the Groupons. I find it a daily adventure to see what's on, to see if there's anything exciting that we can do," said the 30-year-old from southern Ontario.

However, she's found that some hotels make their regular prices seem higher so the discount looks more appealing. For instance, a she paid $89 for a hotel room with a value of "up to" $200, but was disappointed to learn later that most rooms normally go for $119.

For businesses, the tradeoff for offering deep discounts is the free advertising they get for promoting their services on group buy sites.

"Even if a deal falls through and not enough people sign up, you just got your brand in front of tens of thousands of people for nothing," said Raymond Pirouz, a lecturer on new media marketing at the University of Western Ontario.

The jury is still out on whether coupon users will visit establishments again if they're not offered a discount, or will simply hunt for the next deal, he added.

And sometimes establishments can be victims of their own success. If a flood of coupon-wielding customers all come on the same day, it may supplant customers willing to pay regular price. If users are disappointed, word will surely spread fast.

"That's what's great about social media. People are quick to let you know if you're screwing up."

 

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