9/23/2010 1:00 PM ET|
Big discounts on little pleasures
If you're struggling to afford essentials, steer clear. But if you want to stretch your dollars and enjoy some small luxuries, these deals are worth a look -- but be quick.
I've discovered another exception to the "If it seems too good to be true, it probably is" rule. The first was cash-back shopping. The new one? Social buying.
Social buying is an economical way to go out to dinner, have a facial, see an opera, get a massage, attend a sporting event, buy glasses or stretch vacation dollars. You can try a new business or, if you're lucky, snag a deep discount at a place you already know and love.
Of course, you shouldn't buy if you can't afford to spend right now. But social buying is a great way to save on things you've budgeted for, whether it's a haircut or a night out with friends.
BuyWithMe underwrites the social life of Jonathan Hines, a software engineer who lives just outside Boston. "When you have a (deal), the night goes on a lot longer," Hines says.
He considers social buying a no-brainer: "Why wouldn't you use it? The deals are there!"
How it works
Social-commerce sites promote their offers through social media and direct e-mails to members. (There's no cost to join.)
Usually the deals are local, but not always. For example, Jasmere contracts with specialty retailers that ship nationwide.
Most are offered for 24 hours, although some sites list for several days or a week. When enough people commit via credit card, the deal is on. You're e-mailed a voucher that you exchange for the product or service.
LivingSocial will give you the daily deal for free if you persuade three other people to buy it. This viral marketing lets a company reach many thousands of potential buyers in a very short time.
"Consumers get a great deal, and local businesses are getting people through the door," says LivingSocial CEO Tim O'Shaughnessy.
'Discover local gems'
The most common deals are for restaurants, salons and spas. Discounts to these places help encourage people who are nervous about spending to open up their wallets during an economic downturn. That was the idea behind SocialBuy, says co-founder Eli Natan.
"We're offering the things people want to do but maybe can't afford right now," he says.
Persuade a bar to offer $5 martinis and you'll pack the place, even on a Tuesday night, Natan says. SocialBuy has also drawn thousands of customers to hockey and basketball games, dessert shops, spas, restaurants -- even a fire-juggling class.
Social commerce abounds in nonessential but nifty experiences. A few examples I found: auto detailing, yoga classes, "flightseeing," indoor skydiving, city tours, fitness boot camps, rock climbing, trail rides, museum memberships and tattoos.
Groupon founder Andrew Mason sees social buying as way to help people "discover local gems."
"The idea is that you're exposing people to new (experiences)," Mason says.
Austin, Texas, newcomer Stephanie Hackney says Groupon has helped her and her husband get to know their new home. Among other things, they've enjoyed a Segway tour, a museum membership, a wine tasting, and minor-league hockey and baseball games.
"This is a much less expensive way of trying new places," says Hackney, who recently took a trapeze class with a $39 Groupon deal.
'Getting our brand out there'
How do the businesses make any money if they're discounting so deeply? Sometimes they don't. There are always going to be people who cherry-pick the best deals and never return.
What's just as likely is that people will discover a new favorite. Boston resident Angela Goff kept meaning to try a pizzeria near her apartment. But it took a BuyWithMe voucher to get her through the door.
"Now I go to it on a weekly basis," Goff says.
A Radisson Hotel in Boston's theater district recently ran a BuyWithMe promotion: $99 for a room, parking and breakfast for two. "We're not making money," hotel spokesman James Baker says. "But we're getting our brand out there -- we're getting customers who could be repeat customers."
Besides, those customers often spend more than the voucher's value. Martin Tobias, the CEO of Tippr, says merchants report that the discount translates into "a nicer bottle of wine (or) an extra appetizer."
That's not always the case, of course. I'm pretty good at keeping to the amount of the voucher and being courteously resistant to the "upsell."
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