Group buying sites

Should you be wary of group-buying sites?
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Should you trust group-buying sites or should you steer clear? The CHOICE shadow shop puts them to the test.

Australians are embracing online retail with gusto. And while group-buying (also known as daily deal) sites offering discount vouchers for food, services and activities are relatively new to the online shopping landscape, they’re increasingly popular.

The Australian group-buying market is worth about $500m, according to Naren Sivasailam, senior industry analyst with IBISWorld. “Group buying is a small subset of online shopping but it is definitely a growing segment. Given how cautious consumer spending is right now, the idea of getting something for next to nothing is obviously appealing.”

But the group-buying industry does have a dark side. In October, NSW Fair Trading (NSW FT) revealed that, despite the introduction of a voluntary code of conduct into the group-buying industry a year earlier, complaints had spiked sharply. In fact, group-buying sites were second overall in their annual gripes list, following complaints about household appliances.

“The increase occurred in the second half of last year and through to March this year because the industry exploded in that time,” says NSW FT assistant commissioner Don Jones. “There were a number of new entrants into the market and they were competing quite aggressively for customer lists. They concentrated on getting customers, but not on keeping them.”

For more information about shopping online, see our Networking and internet section. 

CHOICE shadow shop

CHOICE bought a voucher for a deal from 10 different group buying sites for locations around Australia. We let the vouchers expire, then got in touch with the sites and with merchants to seek a refund, credit or extension. While the terms and conditions of all sites state that vouchers must be used by the expiry date, we wanted to test the customer service of the merchants and group-buying sites. Our shadow shopper uncovered some interesting results.

Buying sites shadow shopped

Our findings

Getting in touch with the sites was relatively easy. Groupon, Living Social and My Team Deals listed phone numbers. Spreets also listed a phone number although this was hidden in the “help” section of the website, so our shopper contacted them via web form. Deal Lovers, Ouffer, Scoopon, Moosta and OurDeal listed email addresses or had web forms for questions and concerns. Cudo required a a web form to be filled out, but upon entering her details our shopper was instantly connected to a live chat operator.

Response times for most sites were reasonable. Cudo gave instant resolution via live chat. Our shopper was on hold with Groupon for eight minutes; Living Social only made her wait for about 30 seconds. Spreets responded to an email in 27 minutes, while Deal Lovers responded within an hour. Scoopon and OurDeal took seven days to respond, and an email to Moosta was still unanswered after 27 days at time this piece went live. My Team Deals (MTD) offered good service to begin with: upon receipt of our shadow shopper’s request, a representative of MTD rang her back quickly and left a return business line and mobile phone number.But when our shopper rang back, an MTD representative promised to ring her again with an outcome, but never did. 

Our shopper was offered a positive resolution to the expired coupon issue on three occasions. Cudo provided the best outcome, crediting her account in the amount of the expired coupon. While the other sites weren’t willing to honour her coupon, three of the merchants (all in Sydney) were. Pizza Pesce Birra offered to honour an expired coupon for a two-course meal with wine for an additional payment of $5, Konga Fitness offered to honour a coupon for five dance classes for an added $10 and Complete Chiropractic Care agreed to honour with no further payment.

Reminder emails were a great feature of several of the sites we shadow-shopped. Groupon send an email about one month and then one week before voucher expiry to remind our shopper to use its deal. Living Social sent an email a month before expiry. Ouffer says it will also soon start sending reminders.

What to look for

Group-buying sites certainly provide some great discount opportunities. But despite the fact that the industry has been maturing and the group-buying code seems to be making a difference to customer service, consumers should still shop with caution. If you’re considering a deal, do your research.

  • Check review sites for feedback on the merchant.
  • Look out for too many vouchers being sold for a small business that may not be able to handle a peak in demand.
  • Only buy vouchers from code signatories.
  • Don’t leave your booking to the last minute when you’re seeking to redeem a voucher – this is when the merchant is likely to be hit with a spike in demand.
  • If you have any complaints, seek a resolution with the group-buying site. If that fails, contact the consumer affairs body in your state – our sources tell us a positive  resolution is likely.



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