Commentary

Discounted To Death

Among all of the breathless coverage of Groupon's success, Business Insider stands out as the most skeptical on the sustainability of the Groupon business model. Already the deal-of-the-day market is getting crowded with Groupon wannabes, from local Web sites to demo-targeted offers to moms and young men, and high-end offers like Gilt.

I have tried a number of deal-of-the-day programs (including Groupon) and eventually canceled them all because they began to feel more like spam than good deals. While I can be as impulsive as the next guy, I found that the time spent calculating and comparing the offers to the usual on-sale prices on the retailer's own site was pretty much a waste of time. I came to regard each email not as "Hey, here's a deal you might like," but rather "Here is a bunch of shit you don't really want or need that we are being paid to push to you, so spend a few minutes looking at this stuff and make sure you really don't want any of it." I didn't.

I'm sure the theory sold to advertisers is that this is a great way to introduce your business to new customers through a generous discount they won't be able to resist. Once in the door, consumers will either buy more than the discounted item or have such a cool experience that they will become repeat customers. Everybody wins. But there are plenty of stories about customers doing just the opposite: not buying more and never coming back. I should know, since I'm one of them.

Just as there are people who relentlessly clip (or download) coupons from the local newspapers to save a bundle when they grocery shop, I suppose there are those turned on by deal-of-the-day discounts. But are these folks building loyalty to the businesses in the offering -- or to the email discounter provider? When you take advantage of sales before and after Christmas, do you really make a mental note to reward the retailer with future business because of the savings? Or, like me, do you think: "OK, I am helping reduce the inventory they overbought or am taking discontinued models or lines off their hands. With their mark-ups they are still at least breaking even. And what the hell, the only thing left is XXXL!" The only loyalty being built there is to wait out the next sale instead of ever paying sticker price.

What was supposed to be "local" to my hometown so I could run out and get a $50 meal for $25 was often 20 miles away (not an insignificant distance at $4 a gallon at the pump), and the meals I bought were pretty mediocre at best. I would say 99% of the "local retail" offers held absolutely no geographic interest for me. During the time I was a Groupon subscriber, I never saw one offer from a merchant in my hometown. In addition, most of the offers were for stuff that I would never buy anyway (like $20 worth of candy for $10).

With deal-of-the-day offers from national retailers that would have been delivered through the mail, I too often found limited sizes and colors used as a tease to sell colors that would not provoke your wife to ask "What the hell...?" And most of the time the offers were no different from what you would have gotten just wandering into the retailer's "outlet," "discontinued" or "on sale" section of their Web sites.

Now, to be honest, I am not a shopper (like most other men I know). I don't wander the aisles of stores seeing what's what. I walk in, buy what I intended to buy, and walk out. Last weekend my son said we set a world record for getting in and out of Home Depot.

I research online nearly everything I buy that costs more than about $100, to get a sense of what I should be paying before buying locally or online. Perhaps that mentality makes me a bad candidate for deal-of-the-day offers, which certainly must count on impulse to drive much of their business.

My rule of thumb is pretty much "Did I wake up this morning and put this item on a shopping list?" The answer for deal-of-the-day offers is nearly always "No" -- a word I think these businesses will start hearing more and more.

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