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Trend seen in group buying sites

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TAMPA – In the past few years, group buying sites have popularized in dozens of geographic markets worldwide, providing large discounts at local retailers and enabling consumers to indulge in luxuries that seem unattainable during a recession.

Group buying sites are internet-based websites that have become popular around the world. The online coupons themselves – available for different retail stores, restaurants and even spas – are only purchasable in certain geographic areas in the world, differing per website.

Each site has a different business plan. Some reward shoppers based on how many of their friends they can convince to sign up, while most coupons are inactive until a certain number of takers have bought them.

Also, each deal is restricted to some degree. Most have expiration dates 6 months out from the time of purchase and the number each person can purchase restricts some.

Group buying sites began to appear at the height of the recession. Since then sales have increased up to 60 percent in 2009 and 70 percent in 2010 according to reports by CBS news.

The average consumers spends $10 to $30 on a purchase from group buying sites and with each site having millions of subscribers, the industry revenue is skyrocketing.

“If I’m saving 50 percent to 80 percent on one item, that’s ‘X’ amount of money I can spend somewhere else,” said Anthony Teta, an avid Groupon fan and USF student. “You just have to decide if it is something you actually want, or if you only want it because it’s 70 percent off.”

These sites, such as Groupon.com and LivingSocial.com, offer daily discounts for restaurants, salons and spas, and other local retailers in the range of 50 percent to 75 percent off.

One year ago, Groupon.com had 1.5 million subscribers in America, or a 1-205 ratio, according to TheEquityKicker.com. Today, one in six Americans subscribe to Groupon.com. Similar sites have seen exponential growth over the last year as well.

“I was referred to group buying sites by multiple friends,” said Austin Karr, a New York City resident and former USF student who has been using Groupon for 3 years. “They make living in our economy and still enjoying usual luxuries a lot easier, and I can play tourist in my own city.”

Brendon Harbour, a sophomore at USF, used Groupon offers at restaurants and amusements rides while vacationing with his family in Las Vegas. Harbour said the discounts helped ease the financial load.

“Exploring group buying sites is a great way to find things to do in a given city and allows you to do them cheaply,” said Harbour.

People can be notified of each day’s deal by signing up for daily emails or checking Facebook or Twitter. Many of the group buying sites – specifically Groupon and LivingSocial – also have their own iPhone apps.

The majority of group buying sites cater to a larger audience and larger metropolitan areas, but some sites target a narrower audience.

“Other sites I’ve explored, like 8coupons or WGTG, are limited in the coupons they offer and their market locations,” said Vargus. “Some are just simply more expensive, too.”

Campus Dibs, a Groupon for college students according to techcrunch.com, acknowledges the stereotypical college student with minimal funding. The site offers discounts on textbooks, school supplies and restaurants.

Gus Vargas, a computer engineering major at USF, uses Groupon and Campus Dibs frequently to find local deals. A classmate referred Vargas to both sites.

“The ease and accessibility of group buying sites – in addition to what they offer – caters to everyone,” said Vargas. “With most college students living on a budget, the idea of such large discounts on food and entertainment is especially appealing.”

The Top 9 sites, according to the annual revenue of each, include Groupon, LivingSocial, Tipper, 8Coupons, Buy With Me, Gilt City, Juice in the City (JITC), WE Give To Get (WGTG), and Crowdsavings.com.

Groupon-style group buying is popular in more than 15 countries and over 100 markets and has reached more than 35 million users.

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