Savings in Numbers
Everybody loves a good bargain, especially when it’s delivered right to your inbox. Lesley Stones gets to grip with the recent bulk buying website craze and learns a couple of interesting things along the way.
Belly dancing takes a lot more concentration than you would think. I can walk and I can shake, but walking and shaking simultaneously somehow defeats me. No, maybe that is not going to be my new hobby after all.
Nor was I hooked on the Japanese massage given by a Bulgarian woman living in a suburb of Johannesburg. In fact, that was so weird that I started calculating how quickly I could make a dash for the door. But the excellent meals at swanky restaurants and all those youth restoring facials were a treat.
If you are puzzled by the eclectic list of things I am sampling, then you are clearly not among the army of people who are currently signing up on bulk-buying, discount websites.
Every day a new offer pops into my inbox, enticing me with a 50 – 60% discount for a service. One recent offer involved a cheap colonoscopy, if I remember correctly, but I shuddered and hit the delete button. Most are for things you really rather fancy, either because they are things you would normally pay more for, or just because they are just so darn cheap.
US based Groupon (a blend of “group” and “coupon”) started the craze and quickly rolled out operations around the world. It has spawned thousands of copycats too, of which more than 20 are in South Africa alone, including Wicount and Zappon. Their tongue-in-cheek descriptions of city specific deals add fun to the cost-effectiveness of the shopping experience.
It’s a simple scheme. The operator persuades businesses to run a special offer, subject to a minimum number of people accepting it. The shoppers pay online and get a voucher for the service. If too few people buy the deal, the merchant pays nothing and the few potential buyers do not have anything deducted from their credit cards.
It’s fabulous for consumers, because we get the sweet end of the deal. It works well for the websites too, since they retain roughly half of the fee each buyer pays. But there is a big debate about whether this is sustainable, because the merchants may not fare so well.
It is fine if they are offering a service that does not cost them anything extra. If, for example, more people join a yoga class, it probably will not increase their overheads. But restaurants and retailers supplying goods may be cutting their profits to the bone. The sites rarely generate repeat business for the supplier, because the flash flood of customers arrives purely because of the bargain and are never to be seen again.
Worse, once people know that you can provide something for a fraction of the usual fee, they may be reluctant ever to pay full price again. I loved my three course dinner for two with a bottle of wine at Sandton’s Da Vinci Hotel when it cost R240. And so did more than 1,000 other social website shoppers. Have I eaten there again and paid the full R600? Er, no. Actually, I’ve moved to another restaurant which is currently offering a delicious dinner with a 60% discount.
Word of mouth and massive numbers is crucial for success, so consumers have an extra incentive too. When I encouraged a friend to use Wicount, he got R20 off his first purchase and I was rewarded with R50 off my next buy as soon as he bought something.
Ninety women bought the belly dancing offer run by Gypsy Rhythms studios. Oddly, only about half of them actually turned up. Of those 45, a mere five or six signed up to join the classes permanently. “Partly that’s because people think if they can do it for that price, why should they pay the full price,” says dance instructor Candida Di Giandomenico. “You’re also less committed if you haven’t paid much. It’s like buying something on sale that you end up never wearing, but it seemed like a good idea at the time.”
The downside was that one instructor booked extra hours at a dance studio to accommodate the newcomers, and when they didn’t arrive or dropped out after finding it harder than expected, the studio still had to be paid for. “We got some extra income, but it was nominal,” she says.
Interestingly, Di Giandomenico has used a bulk buying website herself to buy a pedicure. But her feet won’t ever lead her there again. “I wouldn’t go back. I just took it because it was a good price,” she says.
That is the best attitude to have, really. Buy on impulse, buy cheaply, try new things and have fun. Now, when does that offer for a month of rugby lessons expire?
Sign up for Savings
Groupon: http://www.groupon.co.za/
Wicount: http://www.wicount.co.za/
Zappon: http://www.zappon.co.za/
Story by Lesley Stones
