It’s been more than a decade since Groupon burst on the scene as a way to score deep discounts on everything from fine dining to car detailing. It quickly developed a legion of devoted followers, but many of those fans quickly discovered there were catches that made it difficult to redeem deal vouchers.
“They only had so many slots a day to use the coupon,” explains Laura Jones of Lawrenceburg, Indiana. She’s talking about a photo package she purchased from Groupon for use on vacation, only to discover it was nearly impossible to schedule a session.
Disillusioned customers like Jones stopped buying from Groupon rather than jump through hoops to redeem vouchers. However, the online marketplace has since revamped how it does business, now offering goods as well as services and promising that even expired vouchers retain their purchase value.
Those changes have helped bring customers like Jones back into the fold. While she notes there have been some delays in shipping during the previous year because of the COVID-19 pandemic, she is once again a happy — and regular — Groupon customer.
Whether you are a new or returning Groupon shopper, here’s what you need to know about how the company does business today.
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What Is Groupon?
Launched in 2008, Groupon originally offered a single deal per day. To activate the deal, a certain number of people would have to buy in. These daily deals were available for 24 hours, and early offers included two-for-one pizzas and 50% off at local retailers. Once a deal was activated, anyone who purchased it would receive a voucher that could be redeemed later.
Those group-activated deals are a thing of the past. Instead, Groupon now offers vouchers for discounted goods and services that can be purchased at any time with no minimum number of buyers required.
How Does Groupon Work?
Before you start buying deals on Groupon, take a moment to understand the ins and outs of the site. Here’s what you need to know about Groupon:
— Both goods and services are sold on Groupon.
— Read reviews before buying.
— Understand the fine print.
— Not all deals are created equal.
— Promo codes and cash-back sites offer additional savings.
— Payment options can vary by deal.
— Groupon may not be ideal for all business owners.
Both Goods and Services Are Sold on Groupon
While you can still buy vouchers for discounted services or savings at local stores, Groupon now offers a wide selection of physical goods.
You can find the following and more on the site:
— Hotels and travel.
— Home goods such as comforters and cookware.
— Jewelry and flowers.
— Sporting goods and fitness equipment.
— Entertainment tickets.
— Automotive services.
— Electronics including televisions and home security systems.
— Food and drink.
— Pet supplies.
Customers can still search for offers by location, but many of the deals are available to shoppers regardless of where they live. “Groupon has prioritized, like most email marketers, volume over optimization and simplicity over customization,” says Jonathan Treiber, co-founder and CEO of RevTrax, which provides offer management solutions.
If you buy goods on Groupon, check the reviews to see whether other customers believe the item is represented accurately on the website. As for services, watch for red flags that could indicate a fraudulent deal, such as no reviews or very few purchases.
Also check the company’s website and social media accounts to confirm it matches the details on Groupon. If it seems too good to be true, contact the business directly to confirm they posted the offer. If you find yourself on the receiving end of counterfeit goods or a fake voucher, contact Groupon immediately.
Understand the Fine Print
Don’t buy any deal vouchers until you’ve reviewed the redemption requirements. “Every deal has limitations in terms of when its promotional value expires and what the deal can and cannot be used toward,” says Kelly Goldsmith, associate professor of marketing at Vanderbilt University’s Owen Graduate School of Management. “It may be associated with a minimum spend at the vendor, and not all vendors within a chain may accept the Groupon.”
Other fine print details include additional fees and charges, restrictions for new customers only or access to a limited menu or selection of products when redeeming a Groupon voucher. Some Groupon deals may only be used on specific days.
Be sure to check the refund and cancellation policy, too. If you are on vacation and purchase a Groupon for a weather-dependent activity, like whale watching, what happens if the company cancels? If you don’t live in the area, you may not be able to reschedule, so make sure you can get a full refund.
Not All Deals Are Created Equal
At its start, it wasn’t unusual to see deals on Groupon for 70% off retail prices. Nowadays, you might find 35% off a haircut or 10% off a car wash. Deeper discounts may be found on travel packages and physical goods.
However, be aware of inflated retail prices. Just because something is listed on Groupon at a substantial discount doesn’t make it a good deal. Customers still need to do their research, compare prices and read reviews to ensure they are spending their money wisely.
Promo Codes and Cash-Back Sites Offer Additional Savings
Customers can save even more by using promo or coupon codes when ordering from Groupon. Though not always available, these codes can be found on free deal aggregators such as Slickdeals, DealCatcher or the browser extension Honey. A typical coupon may take 20% to 30% off the price of select Groupon purchases.
“One of the things I like about Groupon is that it participates with ( cash-back and rewards companies),” Jones says. Companies like Rakuten and Swagbucks offers up to 8% cash back for purchases its members make on Groupon. The free sites also offers their own coupons for additional savings.
Payment Options Can Vary by Deal
While Groupon accepts all major credit cards and PayPal for purchases on its site, vendors may have different payment requirements when it comes time to redeem a voucher. For instance, not all merchants accept American Express cards. However, this information should be included on the deal page and is one more reason to read the fine print.
If you buy a deal redeemable at the warehouse club Costco, be aware that it only accepts Visa credit cards. Some restaurants offering deals through the Groupon+ program may have other limitations such as restricting the use of non-reloadable prepaid cards and requiring debit cards be run as credit to qualify for cash back.
[See: 35 Ways to Save Money.]
Is Groupon Legit for Businesses?
While Groupon is a legitimate way to market goods and services, the site might not make sense for all businesses.
“When a vendor runs a Groupon (discount) that has small to zero margins, the vendor is taking on a lot of risk,” Goldsmith says. “He tells himself all of the sacrifice will be worth it because surely they will reap the downstream rewards of these customers … coming back and paying full price later.” However, the reality is that Groupon users may not turn into repeat customers but will rather move on to the next company offering a good deal.
Despite that, businesses may find it worthwhile to tap into the vast marketing potential of Groupon. The downside, Treiber says, is that merchants don’t currently have much influence over how their deal is distributed and promoted by the online marketplace.
Still, larger companies with bigger budgets may find Groupon a useful venue to drive sales. Savvy consumers who read reviews and watch for the deals they offer will undoubtedly benefit, too.
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Update 08/09/21: This story was published at an earlier date and has been updated with new information.
Clarification 08/18/21: This story has been updated to clarify the services RevTrax provides.