Groupon? Never heard of it.

It seems that many of the web’s personal finance sites (like this list on Wisebread.com) are actually shopping sites disguised as benevolent dispensaries of financial advice. I checked out the websites like Deal Seeking Mom and Money Saving Mom, and various others from the top ten. Then I checked out another service that has become popular among people with the desire to save a few bucks: Groupon.

The thing I noticed about these sites is that they seem to focus on buying things, rather than not buying things. One site had a picture of an attractive makeup-wearing woman’s face and the text “Request a Free Olay Sample Pack”. This wasn’t an advertisement, it was an actual article. Groupon had all sorts of deals like “Sushi for Two for only $22 at this restaurant in YOUR town! – 50% off! .. Sign up for daily emails from Groupon!”

Even though I’m Mr. Money Mustache Himself, I must admit I was immediately tempted. “Hmm, I do like Sushi. Maybe I should go out tonight? I wonder if they have any deals on tools or bikes? And I am down to zero pairs of jeans without major holes in them, perhaps I should look for Old Navy or Target coupons as well?”.

See, while the deals presented on these sites are indeed good deals, the problem is that they are creating wants and perceived needs inside me, where only contentment existed before. Think for a moment about the quote from one of the nation’s Founding Mustachians, Henry David Thoreau: “A man is rich according to the number of things he can afford to let alone”. I believe one of my biggest advantages in the battle to maximize happiness while buying less stuff than most people, is not even knowing what stuff is available to buy.

This is one of the many reasons that I suggest that you, as a rich person in the making, should not even have access to broadcast or cable TV of any sort. The advertising, and the lifestyles portrayed on TV, and even the product placement in movies, is just too powerful to not trick you into wanting unnecessary stuff. (And regardless of the advertising, there is just too much interesting stuff to do in life – every second spent  watching TV, no matter how interesting it seems at the time, just causes you to miss out on even greater fun).

I actually hadn’t heard about Groupon at all until just a few months ago, and I only visited their actual website today, as part of the intrepid and painstaking research process I do for each of these articles.  But my wife, Mrs. Money Mustache, has her own secret research line into The Real World*. It’s the collection of other ladies she knows through real and internet relationships, both in our original hometown and our new one. Since these folks are not part of the unusually wise group we call MMM readers, she gets a sneak peek into what Actual Consumer Ladies are doing with their time**.

What she sees is amazing. Financial disasters in high-income families. Acres of expensive products and vacation destinations strewn across Flickr photostreams. And through it all, a common theme that it is tough to get by financially in modern life, so we must use Groupons and Online Deal Seeking to make ends meet.

I would suggest that while coupons do actually get you discounts, the most profitable route is still to keep yourself off of as many mailing lists and deal websites as you can.  When we moved into our current house, I did the usual trick of contacting the direct marketing association at dmachoice.org and blocking most paper junkmail (it really works, the maibox can stay empty for days at a time these days). But I have still felt the tickle of temptation from a stream of sneaky catalogs that has started coming to my house. I’ll buy a tool or a guitar stand or a bike part, and it will trigger a stream of Harbor Freight, Musician’s Friend, and Nashbar paper catalogs flowing to my house. Despite my best intentions, I find myself pausing just before tossing them into the recycling bin. Just a quick peek. And an hour later, I’m topping off the cart to the level required to get the free shipping. Now I get beer brewing ones as well. Sigh.

The thing about stuff is, you only need a certain amount of it, even when you are leading a decadent middle-class life as you and I are. When I graduated from school and bought my first house, it was empty. So I did go out and buy a lot of stuff. Couches, microwave oven, pots and pans, a vacuum cleaner, a suitcase, the whole lot. I did it inefficiently by my current standards, since Craigslist was not yet invented and neither was Mr. Money Mustache. But the key is that it was a finite amount of buying. Now I still have all that stuff. So I don’t need to buy most of it again for many decades. Without advertising, you only need new stuff when your old stuff breaks beyond repair***. But really, for a person of my age, the spending on new stuff should be at an absolute trickle, because things don’t really break all that often.

So, I’m investing the rest of the morning in contacting each of the companies and getting off of their lists, permanently. And I did NOT type my email address into the box on the Groupon website.

*(much like the telephones they use to talk between the Real World and Matrix spaces in the movie.. except here on MMM the worlds are reversed: I refer to the fake consumer world outside the cozy enlightenment of the Mustachian Community as the Real World, even though those people are technically more like the people still stuck in the Matrix. Some day we may have to change our terminology to resolve this confusion).

** Of course, Consumer Men also exist in vast numbers, but I don’t have access to such a large group on my own Facebook account.

*** I recently thought this had happened to my 1999 vacuum cleaner. It was purchased for about $60 at Costco during that initial flurry of house-filling purchasing. It’s an upright vacuum cleaner and the handle developed a crack and started flopping off of the body. I had been vacuuming delicately with it for the last couple of years, and contemplating replacing it. Then I manned up a little and went out to the garage and fashioned some metal splints for it with holes drilled to screw into the main body. It’s now sturdier than it was when brand new, and I am confident it’s good for another 12 years.

 

Welcome New Readers! Take a look around. Feeling Hardcore? Start at the first article and read your way through using the links at the bottom of each article. Casual Sampler? Browse the complete list of all posts since the beginning of time. Hope to see you around here more often. ~ Love, Mr. Money Mustache

Where to next? Check out a Random Article

Stay in Touch: Subscribe to posts by e-mail, RSS Feed, or follow MMM on Twitter and Facebook.

Join the Conversation: Learn from Like-Minded Mustachians in The Money Mustache Community

Get MMM automatically
by email:

Related Posts Plugin for WordPress, Blogger...

28 Responses to “Groupon? Never heard of it.”

  1. Mr. Frugal Toque August 25, 2011 at 1:31 pm #

    Half of willpower is just not letting the temptation be available.
    Don’t go shopping while you’re hungry.
    Don’t purchase junk food to leave around your house.
    Don’t carry change if there are vending machines at work.

    Now I can add:
    Don’t peruse coupon websites.

    Though, to be fair, Mrs. Toque has access to a site that gets coupons for free boxes of my favourite cereals and such things as we already buy quite frequently.

  2. The Dutch Clean Shave August 25, 2011 at 1:56 pm #

    You’re correct about Groupon: I had to analyze that company for flaws during a business planning course once, they’re basically an advertising company. They are heavily competing with traditional publishers of newspapers/magazines for budgets allocated to…….advertising space.

    And there are other reasons to limit your “exposure” (yes, that’s an industry term) to commercial messages of ny kind.

    Advertising 101:
    I’d have to dig up the research if pressed for spcifics, but I recall reading in Nudge (Thaler & Sunstein) that even asking for whether one has an intention to purchase a certain item or perform an action such as go voting has an effect on intention itself. And it’s a pretty much accepted theory in advertising that repeated exposure leads to increased awareness at the very least. Ideally an increased rate of response to call-to-action messages (“buy now!”).

    Seriously, look up the “AIDA model”. It’s basic, perhaps a bit too simplistic for the purists amongst marketers, but the basics apply and it has been around since before I was (but I’m young).

    People would generally benefit from a basic knowledge of advertising at the very least, since it has since decades lost its function of merely informing the public about products, but is now in the business of persuading.

    Whew, that was longer than I expected to write.

  3. Adrienne August 25, 2011 at 2:44 pm #

    One big difference between Groupon and other “coupon” sites is that the majority of offers Groupon promotes are local businesses. It gives small business owners a much better promotional opportunity than traditional advertising. Also you can get Groupons on many “services” rather than just stuff. I’ve used Groupon both as a consumer and as a business owner and been really pleased on both sides.

    • The Dutch Clean Shave August 25, 2011 at 3:03 pm #

      MMM: hope you don’t mind me going slightly off-topic by straying away from the consumer’s perspective….

      Adrienne: i’m interested because I haven’t studied their US business model (focused on a European market), but are you, as a business owner, not concerned with their contract stating that, as if I recall correctly, you can’t switch to competing advertising models, coupons at the least, for a pretty long period of time after deciding on quitting your agreement with Groupon? Or is this a clause that does not apply in the US?

      And also, are you not concerned that the low revenues generated from the extremely discounted offerings (I understand they take 50% of the remaining value of the transaction), leaves you with less income even though you have an increased amount of first-time users?

      And furthermore: are you not afraid that conditioning your clients in believing that they can pay at extreme discounts for your product/service is detrimental to its perceived value?

      Obviously, because you say you’re happy about them both as a consumer as well as a client they must be working out for you so I’d love to hear from you about how you view these issues.

      • Adrienne August 25, 2011 at 4:33 pm #

        The contract is a 1 year promise to use Groupon exclusively for online coupons (there is really not much competition in our market for other online coupons at this time – so I had no problem signing). Also that contract was only after we had a successful Groupon (no contract initially – just for repeat).
        The finances work out much better than traditional adversting (newspaper ads etc.) where you pay for the ad regardless of how much it generates. We price our groupons under our avg ticket so we’re at least covering food costs. (been tracking it and it has worked out) The majority of Groupon customers have been new people so it’s well worth it for us.
        Groupon has only been in our market for a year so I can’t speak to long term usage (though I have been thinking about it). Our tactics for now are to vary our offers and limit the time they can be used. If we find that the majority of users turns out to be regular customers we would stop using Groupons.
        That’s been my experieince so far.

        • The Dutch Clean Shave August 25, 2011 at 4:45 pm #

          Thanks, that puts things in perspective. I can see how between covering costs and switching from print the result on your ad budget must have improved. Especially of the measurability of the entire thing must have been persuasive…. Varying offers and using time intervals between offerings are popular ways to try to avoid loss of perceived value. Hope long term works out for you. :-)

  4. PNW August 26, 2011 at 9:48 am #

    Agreed on the getting rid of TV comment!

    Earlier this summer I had a garage sale and sold our old, but still working, TV for $10, avoiding the $20 landfill fee. The gentleman that bought it had two other TVs in his van that he had just bought at other yard sales.

    I don’t miss the TV one bit.

  5. ermine August 26, 2011 at 5:05 pm #

    > I believe one of my biggest advantages in the battle to maximize happiness while buying less stuff than most people, is not even knowing what stuff is available to buy.

    Hah. You can do better than that. As the Delphic Oracle knew all those years ago, the key to happiness is “Know thyself”. I was in the financial district of London for a meeting and walked through the mall to get to the office. And looked at all this crap for sale and figured “I don’t want any of this trash, if I have to lose more hours of my life to work to get it” Job done. It simply left me cold. I could use a better cellphone or a Waterman pen, for sure. But not for what they want for it, so I pass.

    Avoiding advertising is the first step. But after you have been out of the loop for six months you don’t need to avoid it any more. You see it for the crap that it is, an move on :)

    • MMM August 28, 2011 at 7:41 pm #

      You are right, Ermine. I feel the same uneasiness when I see most of what is for sale in the stores – with or without advertising. But I wonder if a hobby electronic parts manufacturer could still catch your eye with a carefully targeted flyer sent directly to your house? I sometimes think I’m immune to advertising, until I see advertising for things that I’m really, really interested in, like components to build a solar energy system. Then my guard drops and I start tentatively adding things to my shopping cart.

    • the Neva river cheapskate September 1, 2011 at 12:12 pm #

      I’m totally with Ermine on this. Avoiding the advertising is much like hiding one’s head in the sand. While seeing the crap for what it is is like enlightenment)

  6. TommyVo August 26, 2011 at 11:40 pm #

    Ahhh, i know all too well about these online coupons and traditional print ad coupons. i have family members who are hoarders and can’t resist items “on sale”, “save save save”.

    Their mentality is it’s on sale, i’ll buy it now and have a use for it someday! i just don’t get it.

    My simple advice is to avoid ALL advertisements if possible. And think at least 3 times it you really need it, what use, and how often.

  7. Marcia @Frugal Healthy Simple August 27, 2011 at 6:18 pm #

    Ah Groupon. There are a few other sites, and somehow, I am on all of their emails.

    While a few of them have been useful – a wine discount and Old Navy…I have found that you are correct, they only create perceived needs. Like nights out at nice restaurants. I just don’t need to do that very often. And discounts on spa days – well, I’ve never done the spa thing. And while it would be nice for a “treat”, well, it’s not a NEED.

    I did get sucked into a 50% off coupon at a local restaurant. The food was good (better than it used to be…it’s gone a bit upscale, and it’s fresh and healthy). But the day we looked at our credit card, we realized we’d been charged twice. So we actually had two coupons. So I ended up with two dinners instead of one, and that’s just too much.

    I am not a big fan of advertising. I’d love to shoot the TV, but that would never work in my household, and after 15 years of marriage, I am just not going to fight that battle. It’s good enough that we can avoid commercials by various means (even though ads are now IN the programming).

    I’d recently read that Groupon does hurt some businesses. Some have stopped using it because so many people used it, they lost money. I see where it’s a way to get people to try your service or restaurant. But man, I eat out rarely, so if I use a groupon, you aren’t likely to get much in the way of repeat business. These days, I avoid eating out and actually get a little ticked off if I get “tricked” into it (like today when we met friends for a play date and then they said “let’s get pizza”). I’ve been known to meet friends for lunch (and eat before I go) or for breakfast (and just drink coffee).

    I see a lot of people who just spend a money like it’s water. And a lot of the “personal finance” sites truly are couponing/how to spend less for stuff sites, instead of how to BUY less.

    Not that I never use coupons. Our local running store has a coupon for 15% off every 3 months, so at least twice a year spouse and I buy new shoes that way.

  8. Jenny September 2, 2011 at 9:58 am #

    Glad to read this – I largely ignore this stuff, unless I would do it anyway (which is NOT very often and most things are not in that category). I hope that in the future there will be a post on the “extreme couponing” trend that is picking up. I’m not one of those people, but I’d be interested in your thoughts. Or maybe I missed this, already, I don’t know.

  9. Tom September 4, 2011 at 4:00 am #

    Not really here to defend groupon, sometimes restauranteurs screw themselves by not reading the terms and sell unlimited cups of coffee at a loss not realizing that people will stock up if given the option. However, I have had some good breaks with LivingSocial. A while back (if you keep up with things), they sold $20 of Amazon credit for $10, limit one per person/credit card. I’m guessing you probably shop on amazon, so getting $10 from amazon _for free_ is definitely a good thing. Not sure if it’s MMM good (lol).

    Also, if I go to the store after eating, I _don’t buy anything_. Sure, I may get some stuff off the list, but then I get home, and either it’s not time for that item or too much effort (think something that takes an hour or so, and I’m hungry now). The result? I either eat something bad for me (frozen waffles) or eat out.

    However! One way to save money is to _allow direct marketing mail_ and take full advantage of Arby’s coupons. Roast Beef Sandwiches keep well and are a decent price with coupons, so there’s no reason not to stock up. Not every meal has to be one made with basmati rice and oat grain.

    Also, since I’m not a hermit, being able to take advantage of Groupon (and one I’ve decided rocks, Half Off Depot, for actually having the tool deals you mention above, depending on the city) is a good thing. For example, I just bought some tickets to Movie Tavern for a movie and large popcorn PER PERSON for $6 each. That’s a much better deal than seeing a movie out.

    I feel for Mrs. Money Moustache, her husband desiring maximum savings and getting rare (maybe they’re extinct!) date nights instead of more frequent discounted nights out. Poor lady. And all these friends to let her know why she needs to be jealous.

    (P.S., you didn’t mention restaurant.com, another groupon competitor which was around first and gives even steeper discounts, with a catch that varies by restaurant).

    • Mrs. Money Mustache September 4, 2011 at 10:27 am #

      Bwahahahaha! Your comment made me chuckle, Tom.

      The major benefit of early retirement is that we go on dates all the time! WAY better ones that what could be bought off groupon or the like. We go for daily walks in the morning to the library, hikes in the surrounding mountains, zoom around on our bikes, have picnics in the park, have afternoon lattes together, turn on some music and laugh and cook. Imagine! Real fun that can’t be bought with money! It’s our little secret…

      Every once in a while, we even indulge and visit our local sushi place for a night out. But, guess what? The other stuff is way better. Movies and restaurants are way overrated. Plus, I happen to be married to the most hilarious and awesome guy in the world, so even mundane events like breakfast and cleaning together are fun. If the ladies knew, they’d all be jealous of me!

      • Tom September 4, 2011 at 11:06 pm #

        So… tell them? They’ll tell you about groupon but you won’t mention “My husband takes me to the _library_. Most romantic guy ever!”?

        • MMM September 4, 2011 at 11:20 pm #

          Umm.. I think she’s joking about any of this being a secret, since there are thousands of people reading this shit. You seem a little confused and imprecise in your criticisms of this article, although I do still like your sideburns in that picture.

      • Dancedancekj September 11, 2011 at 1:58 pm #

        I think being married to Mr./Mrs. MM would make any date or stereotypical mundane activity absolutely fabulous.

  10. Atssuroepc September 4, 2011 at 10:35 am #

    He has the most who is most content with the least.
    Diogenes

  11. Carrie September 11, 2011 at 2:25 pm #

    I agree… mostly. For a person with some “frugal muscles”, as you call them, this stuff can be used to our advantage.

    For example, I took my husband out to a nice Indian restaurant on our anniversary last week. Total bill? $12, thanks to Groupon. The one and only time I’ve used it.

    I also stop by SouthernSavers and MoneySavingMom for stuff like homeschool freebies and to create strategic grocery shopping lists (I do most of my shopping at ALDI and spend less than $160 a week to feed 6 kids, myself and a husband so I think I’m doing darn good.)

    It all boils down to … that dirty word, discipline?

  12. Jeh October 15, 2011 at 8:51 am #

    Carrier makes some very good points…I use Groupon not as a “what can I buy today!” money waster, but as a “oh, look, a deal on something I’ve already made plans to purchase” money saver.

  13. Brendan August 12, 2013 at 7:33 am #

    Learned something today; I’ll be singing up at https://www.dmachoice.org . I have been using catalogchoice.org for sometime which has reduced the catalogs from companies I have ordered from in the past. Now I’m wondering if I should look at republic wireless since that is the ad on this page. No I can’t see an additional bill making me life better.

    • Mr. Money Mustache August 12, 2013 at 10:57 am #

      I agree! DMAchoice is a great step for reducing your junkmail.

      As for Republic Wireless – I have that ad up because at the moment (August 2013), I feel it is the best value on the US market for an unlimited-use smartphone plan. I recommend it because most new readers show up here burdened with a $100/month mobile phone bill, and thus the $19 republic bill represents a significant drop in monthly costs, which does indeed make your life better for people who have not yet reached the infinite money stage.

      http://www.mrmoneymustache.com/2013/05/30/republic-wireless-19-for-an-unlimited-everything-smartphone-plan/

      In my view, there is a difference between optimizing your product/service choices vs. adding more stuff. Almost everyone has some sort of phone service already, so it is different than Groupon, where you are enticed into wanting things you didn’t know you wanted.

  14. Brendan August 12, 2013 at 6:49 pm #

    I agree it sounds like a good smart phone plan (which most MMM readers have). I also thought it was in the spirit of MMM to say I’m being enticed!

    http://www.mrmoneymustache.com/2012/09/18/is-it-convenient-would-i-enjoy-it-wrong-question/

    Only since I live on the trailing edge of tech and rarely use my dumb phone.

    Been enjoying your site. Thanks for the entertaining reading.

  15. GeauxBig November 28, 2013 at 5:07 pm #

    Bam! Just signed up at DMAchoice.org
    No more junk in the mailbox! No more credit card offers!
    Thanks MMM!

  16. Charlie February 18, 2014 at 8:12 pm #

    The only thing I’ve ever bought from Groupon so far was a certificate for a local autoshop. It covers about $300 of regular maintenance for the price of 1 oil change. I made my money back on the first visit. The owner of the shop is always there when I go and he actually told me that he was hoping that people bought the certificate but would forget to use it so that he could get some cheap advertising.

    (I know it’s generally cheaper to change my own oil but in this instance it turned out cheaper for me to use this discount and get it serviced by a pro.)

    • Soldi per tutti February 28, 2014 at 5:47 am #

      I just bought a Living Social deal for a Costco membership. It was discounted and came with a free roasted chicken, a $20 gift card, a large pack of batteries, a pack of drinking water, and some other freebies. Saw a promotional code for 10 percent off, so I got that, too. Then I posted the deal on a parents’ yahoo group that I belong to that has over 10,000 members. I needed three people to buy the deal to get my deal for free. I let everyone know about the 10 percent off code and the potential credit for me.

      Four people bought the deal. I got my Costco membership, et al, 100 percent free.

      Same with a restaurant near me, and with 6 weeks of ice skating lessons for my child. All free after three people bought through my link.

      You have to know how to work the deals . . .

Leave a Reply

To keep things non-promotional, please use a real name or nickname (not Blogger @ My Blog Name)

The most useful comments are those written with the goal of learning from or helping out other readers - after reading the whole article and all the earlier comments. Complaints and insults generally won't make the cut here, but by all means write them on your own blog!