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Are group buying deals a good deal or not?

Yes, consumers like to receive special offers from group buying websites. But are they a good deal for your business?

Thinking about trying social group buying for the first time? Less than happy with your first online group buying experience? Not sure which group buying websites are best?

You have come to the right place. If you sell to consumers, selective use of social group buying sites such as Groupon, Buytopia, LivingSocial, WagJag and FabFind make sense. But don't make a commitment until you have read our primer on online group buying. Make sure you also read the Bonus Tip, especially if you are tired of paying sky-high commissions on group buying deals.

Group Buying Tip #1: If you don't like the commission, try the other group buying websites. Never accept a 50/50 deal, meaning the group buying website takes 50% of the selling price. You can easily get 60/40 and we have clients who have negotiated a 70/30 split – or better.

Group Buying Tip #2: Read the fine print in the agreement. You need to be very specific about what is being offered – and what isn't. For example, you could be giving away a lot more than you imagine if you don't specify that your online group buying offer cannot be combined with any other offer.

Group Buying Tip #3: Make sure to put your best foot forward when the customers arrive and request their group buying discounts. Make sure you have enough staff to handle the sales surge and, above all, don't treat online group buying customers as second class. They will never come back.

Group Buying Tip #4: Accept that some social group buying customers are coming only for the sale price – and will never return. You don't care. What you care about is the customers who come for the offer, but end up buying a bunch of other stuff and, even better, come back to buy more at a later date.

Group Buying Tip #5: Don't assume all group buying sites are the same. The big names, such as Groupon or LivingSocial, will expose your offer to more prospects than the new entrants to the social group buying category, but they will also demand a higher commission. Also, some group buying websites focus exclusively on items that are offered for $100 or less. Other sites offer bigger items, such as a discount holiday. Pick the site that's right for your price point.

Group Buying Tip #6: Test, test, test. One of the great aspects of social group buying is that you can measure results, right down to the bottom line. Take advantage of this opportunity by trying the same offer on several group buying websites. It won't take long before you know which group buying sites are best for your business.

Group Buying Tip #7: You can't grow a business exclusively with online group buying. The margins are too thin. Worse, consumers will only buy when you offer group buying deals. A better group buying business model is to use this option selectively. For example, if you have a lot of excess inventory, clear it with a group buying deal. Or use online group buying to spike sales in typically slow periods.

Group Buying Tip #8: Don't under estimate the value of your investment in online group buying. The obvious benefit is a big increase in sales. Less obvious, but also important, is the increased exposure. A lot of customers who haven't seen your brand before are going to see it for the first time, and chances are you can't afford to generate the same exposure with traditional advertising.

Still not sure about the merits of Group Buying Sites?

You should be wary, because for many companies group buying is a good deal less than they expect. It's also fair to say that some companies just aren't a good fit for group buying, regardless of what terms they can negotiate for a group buying deal in Toronto, the GTA or the rest of Canada.

So where do you stand? Does it makes sense to abandon your margins – and any hope of making a profit – in return for a temporary surge in business? Is it a good deal more? Or a good deal less?

Get the answer by asking us for The Formula. It's a simple, easy way to determine whether you can actually make money by trying a group buying site. And it's even easier to get the formula. Just give us a click or a call (905-940-6610).

Bonus Group Buying Tip

One of our clients was considering doing a social group buying offer, but changed their mind when we offered an alternative approach that was based on the group buying business model, but didn't involve paying any commission. It worked beautifully. Call us (905-940-6610) to learn more.