What is group buying?
Several group buying websites (such as Scoopon, Spreets, deals.com.au, Cudo, LivingSocial, and Groupon) operate in Australia.
These sites – also referred to by some people as ‘daily deals’ or ‘deal of the day’ – sell vouchers or coupons for goods and services with big discounts. In some cases, the vouchers are offered on the condition that a minimum number of buyers take up the deal.
We receive enquiries and complaints about group buying, particularly in areas such as hair, beauty and personal care services, restaurants and cleaning services. Common complaints include non-supply and incomplete supply of products or services, and difficulty in booking services and redeeming vouchers.
How does group buying work?
Many group buying websites work by negotiating deals with local businesses and promising to promote their products and services, to deliver new customers, in exchange for big discounts.
Subscribers who want to take up an offer enter their payment details online. A voucher is emailed to them to print off and claim their purchase direct from the business.
Many of these websites require online membership and deals are sent via email or social media such as Twitter and Facebook.
Other daily deals
Other daily deals websites such as Catch of the Day, Shopping Square, oo.com.au, Deals Direct and Crazy Sales offer discount deals on products (and sometimes services) for a limited time. Stocks are limited and items often sell out before the offer ends. These daily deals differ from group buying deals in that the customer generally directly receives a product or service, rather than a voucher.
Tips for consumers
- check online for any feedback or reviews on the group buying or daily deals company
- be aware of what products and services are being offered and what is not included in the deal
- check the terms and conditions of sales on group buying websites carefully, including expiry dates on vouchers
- check with the website to see if they give refunds if the service provider goes out of business before vouchers are redeemed
- be prepared for delays in making bookings. Group sales can create a lot of demand. Book early to avoid high demand near the expiry date.
Tips for small businesses considering group buying offers
Businesses thinking about offering such deals need to be aware of the potential demands and risks. Business managers should:
- consider the potential demand created by advertising services through group buying websites and whether your business can deliver those services on time and in a reasonable manner. For example, you may want to limit the deal offered so it doesn’t restrict your ability to serve regular customers
- ensure that you can deliver services as advertised and that the terms and conditions of sale are fair and clearly expressed
- consider obtaining independent financial and/or legal advice about the potential benefits and risks of group buying before you enter into an agreement
- be aware that new customers taking up the big discount may not come back unless further deals are offered.
It is an offence for a trader to accept payment for products or services and not supply them within a reasonable period.
Industry code of conduct
Many of the major group buying and daily deals companies are signatories to the industry's code of conduct, which includes a process for consumer complaints.
For more information about the code, visit the Association for Data-driven Marketing and Advertising (ADMA) website.
If a group buying deal goes wrong
If consumers have trouble redeeming the voucher or unreasonable delays in booking, they should contact the group buying website to seek a refund.
If not satisfied with their response, view our Resolve your problem or complaint section.
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