In the world of retail, while the way people buy goods and services may be evolving at a rapid clip, it turns out that some aspects have changed nary a bit.
Take online couponing. Groupon and LivingSocial are the two big players in this segment, which enables consumers to take advantage of deep discounts on products or services providing enough people sign up for the offer. They’ve been proliferating in retail markets all over the country.
But think back to the “bad old days” of brick-and-mortar retail. Often, you might encounter a “deep discount” at a grocery store or big box store, only to realize later that the discount was calculated off of an unrealistically high list price for the item.
While not illegal, such practices are certainly deceptive, in that the product was rarely if ever sold at the “standard” price.
Well, guess what? When looking at online coupon deals, we’re now finding the very same practices at work.
Recently, local local services online directory Thumbtack contacted vendors offering daily deals from Groupon or LivingSocial. Vendors were “shopped” in metro markets all across the country that included a variety of services ranging from home cleaning and maid services to interior painting, handyman services and studio photography.
In eight out of ten cases, Thumbtack found that it was quoted a price over the phone that was lower than the advertised “regular” price cited in the supposedly “great” deals being offered.
On September 19, 2011, Groupon offered two hours of home cleaning services in Phoenix, AZ for $49 … an amount it claimed was 67% off of the “regular” price of $150. When contacted by phone, the non-discounted price for the exact same cleaning services was $80. So the consumer was still getting a discount … but hardly the 67% as breathlessly claimed.
On August 24, 2011, Groupon offered carpet cleaning services for a 200 sq. ft. area in San Francisco, CA for $45 — purportedly a 78% discount from the regular price of $200. The price quoted over the phone for similar square footage? Just $106. No doubt, Groupon, LivingSocial and their participating vendors realize that one way to make an offer more attractive is to make sure the percentage discount is huge – and thus unlikely to be offered again.
It’s really no different from practices we’ve seen used in retail over many years. But as more consumers become more savvy to the ways of online deals, it’s quite likely that we’ll find fewer people choosing to participate in them based on the “whopping” discounts claimed.