Let's make a deal: is group couponing losing its savor?

• Author: Haraldsen, Tom
• Position: Techknowledge

What if someone offered you a $20 bill in exchange for every $10 bill you handed to them? You'd be making that deal all day long, and who'd blame you?

That's what led to creation of national couponing platforms like Groupon and its major competitor, LivingSocial. Both have heavy followings, especially in Utah, and have led to the creation of several similar local concepts. By offering retail deals for half of--or less than half of--face value, the craze has grown so popular that Groupon was tendered a reported $6 billion offer from Google last year for its purchase. The owners of Groupon turned it down. Not enough dough.

So Google, and its newest not best friend Facebook, have both jumped in on their own. Google Offers has been BETA tested in Portland, and Facebook Deals is currently being tested in Atlanta, Austin, Dallas, San Diego and San Francisco.

If you don't already know, here's how it works. A retailer uses a third party, such as Groupon or LivingSocial, to offer consumers a coupon worth a certain value. The third party sells that coupon to consumers for a reduced price--maybe a $60 dinner coupon for $30, as an example. The consumer purchases that coupon, the third party keeps a portion of the purchase price as its fee, and the retailer gets the rest. It's easy to see why a $100 coupon for a nice dinner, one you can buy for just $50, is attractive to consumers. The restaurant hopes to make up the difference with add-on purchases at the meal and through repeat purchases. At least that's the theory.

[ILLUSTRATION OMITTED]

Over the past few years, offers have expanded way beyond food and entertainment. Coupons are now sold for everything from health and beauty treatments, services and travel, to furniture, home improvements, and legal services such as wills and living trusts--just about anything you can name.

The question now being asked is--does this platform still feel like a win-win deal for all involved? Some Utah companies who've participated in these types of programs, both locally and nationally, are starting to wonder if the saturation, and thus dilution, of the concept is causing it to lose attractiveness.

Buyer Beware

"I'd have to say that as a consumer, businesses are getting a little trickier with them," says Nichole Coombs, a loyal coupon user and blogger who has hosted a local weekly radio talk show as part of a group called Utah Coupon Gals. "You really need to read the fine print, or you may find you've purchased a...