Social Buying Motivated By Psychology, Not A Great Deal

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In David Pogue’s NY Times article “It’s Not the Online Coupons. It’s the Psychology,” he argues that it’s the idea that you’ll save a bunch on things that you could potentially want more than the actual savings that makes social buying seem great. It’s what made Groupon the fastest-growing Internet company in history, gaining a $1.5 billion value in a year and a half.

With many copycat sites out there, it seems that social buying is quickly becoming the cheapest way to buy, but it’s not with its own set of not-so -positive aspects. Pogue argues that you don’t really save that much money in the long run: Ten dollars off isn’t much to be really excited for. Yet social buying junkies seem to becoming overcome with happiness when they save because of the idea that they got a great deal. Having one offer a day plays on your sense of urgency, according to the writer. Businesses and Groupon don’t have anything to lose since there is a minimum amount needed to be sold before the coupons are valid, ensuring that they either get a slew of new customers or don’t have to lose money giving out (arguably) half off coupons to a few people. Even though the expiration date is generous, purchasers often forget to use these coupons, which means free money for Groupon and the business.

I agree with Pogue: I’m often tempted to buy Groupon’s because I think I’m missing out on a steal. There’s a couple things that he forgot to mention, however:

– Although it seems like it’s 50 percent off, that discount only holds if you’re buying the exact amount of your gift certificate. I recently bought the Groupon for $25 for $50 at any American Apparel. The item I wanted was $40, so I ended up buying two of them to get my maximum $50 worth. That’s only a little more than 30 percent off – and I had to buy more than I needed to get my discount. I’m not complaining because I still did save money, but it wasn’t as much of a discount as it seemed.

– You feel like you’re saving $50 when you pay with your coupon at the counter, but you forget that you put the money up front in the first place. Your money just sits in these coupons until you find something or some time that you need to use it or you find yourself at the expiration date and decide you have to use it before you lose your money.

– How many of you out there have participated in a social buy because it was an awesome price and didn’t consider if you really needed it? Yeah, facials and getting my nails done is always fun, but I don’t really need these services as often as they are offered on these sites. I feel like I spend more than I normally would. As my uncle likes to remind my family, “It’s not a bargain unless you need it.”

– Pouge did point out that people often forget their gift certificates. What he forgot to mention is that since the social buying companies often partner with smaller businesses, so it’s really hard to make time to get to the place since it typically isn’t your usual spot. That was the reason why most of my Groupon’s expired. It’s very rare to get a Groupon that works at more than one location, so when you pick a random good deal it might be hard to cash in if the company is not on your way home.

Even though Pogue and I agree social buying isn’t as great as it seems at first glance, I have to admit that I’m not going to give up checking these sites everyday. After all, there’s nothing as addicting as a cheap buy, and I’ll eventually use those three manicures, four massages and seven gift certificates for restaurants that I bought before they expire, right?

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