Groupon-clone websites have become a treasure trove for some consumers, but others are discovering they can be too much of a good thing.
Katrina Wentzel of St. Paul is one of 50 million Americans scoring big savings at the deal-of-the-day websites. She gets daily e-mails from Groupon, Living Social, Crowdcut and the Blind Squirrel.
"We've saved 50 to 70 percent at restaurants, tickets to movies and plays, and bed-and-breakfasts," she said. "I almost bought a sky-diving voucher but decided against it. You can lose yourself in the deals."
With more than 500 daily deal sites nationwide and nearly 20 in the Twin Cities alone, it's easy to get lost in the e-mails. The appeal -- aside from the significant savings at restaurants, spas, museums and movies -- is the simplicity. Registration is as quick as entering an e-mail address and a ZIP code.
But some bargain hunters are feeling bombarded by e-mails coming from the sites. Wentzel saw that potential problem early on, and limited herself to four daily deals. Still, she's recently cut her daily-deal e-mails down to one by using an aggregator. They collect the deals from multiple sites and send them all in one e-mail. Yipit.com, for example, compiles deals from nine sites.
"It's a lot simpler," Wentzel said. "I wish I had known about it earlier."
Downsides to the landslide
Being overrun with e-mails isn't the only problem. Some buyers say that they find so many deals that are too good to pass up that they overbuy or let the vouchers expire. Unlike traditional coupons, which are free, vouchers let you purchase at a discount, but they cost money. Letting a voucher go can cost a buyer $5, $20, or even $100, depending on the purchase.
But what many voucher buyers might not know -- and what the daily deal sites don't advertise -- is that customers can use a daily deal voucher for the price paid, even after expiration. For example, a customer who paid $40 for a massage worth $80 can still get $40 credit toward a service after the voucher expires.
Customers can also ask for a little leeway. Some businesses, such as Creative Lighting in St. Paul, will honor the full value of its Groupon voucher for a short time after the expiration, said owner Michael Minsberg.
Another drawback: Organizing vouchers can be a hassle. In addition to having to manage them, some sites don't allow a voucher to be printed until the day after the purchase. In fact, keeping track of daily deals is so complicated that a new site devoted just to that has surfaced.
Citypockets.com is a free service that keeps track of a buyer's vouchers and sends reminders before the vouchers expire. Unfortunately, the company tracks only eight of the larger deal sites, so vouchers from smaller sites might not be tracked.
Geography can also work against daily deals. A Stillwater resident isn't likely to be interested in a Maple Grove restaurant deal, no matter how good. You can avoid that by choosing sites that ask for areas of interest and a ZIP code at registration, such as Crowdcut.
Only sites that can tailor their deals to their customers will survive, said Kyle Hale of Crowdcut.
LivingSocial, for example, homes in on activities geared toward kids with a separate family edition. Travelzoo appeals to an upscale clientele with bargains on airfares, four-star hotels, entertainment and weekly local deals.
Groupon-style deals are becoming too much of a good thing for businesses, as well. Some local business owners say they're growing tired of sales calls from daily deal reps.
"We're inundated," said Kip Clayton, vice president of business development and marketing for Parasole restaurants, which owns Manny's, Salut, Il Gatto, Good Earth and Burger Jones. Clayton said Parasole has never offered a daily deal, and has no desire to offer them, partly because of the cost.
"If we want to offer our customers a deal, we're not going to give 50 percent of it away to a third party," he said.
Daily deal sites typically charge businesses 40 or 50 percent of the cost of the voucher. Businesses keep the rest, said Chris Leithe of Redeemio.com. But some deal sites are so desperate for deals that they are settling for 30 or 35 percent commission. As more startups join the fray, some run deals at no cost to the business just to build an audience, said Leithe.
Leithe and others say the daily deal frenzy is likely to lead to a fallout. So bargain hunters should enjoy the ride while it lasts. Only a few daily deal sites, including Deal Maestro, have gone belly-up. But experts expect the failures to grow.