Group buying sites on the rise

The market for group-buying websites is heating up but experts warn it's a case of "buyer beware" as the sites rely on consumer impulse buying to succeed.
Sites such as GrabOne, Groupy, DailyDo and 1-DayOut are selling cheap deals in the Bay of Plenty in a system in which a deal is activated only if a minimum number of people buy the product.
Products on offer include everything from hairdressing services and bar and restaurant vouchers to a round of golf.
Savings can be impressive - a typical 1-DayOut deal last week saw a $30 voucher for Major Toms bar for just $14 - a 53 per cent saving.
And internet juggernaut Trade Me is entering the market, launching its stand-alone group-buying site Treat Me on Monday.
Trade Me chief executive Jon Macdonald said the idea would harness the rising popularity of web-based group-buying sites, which originated in America in 2008. Coupons and vouchers were "back in style", he said.
"In New Zealand several sites have sprung up seeking to capitalise on this social e-commerce.
"With the market still in its infancy, we're confident Treat Me will appeal to Kiwi advertisers and buyers as a place to find a great deal."
Although Treat Me will initially sell deals in Auckland and Wellington, Tauranga will be included "in the coming months".
GrabOne launched in Tauranga in August, selling 5000 movie tickets in less than five hours.
The city had been "a real success area" for GrabOne, the site's marketing director Campbell Brown said.
The group-buying concept had taken off in Tauranga and a salesperson for GrabOne was now based in the city, he said.
The Tauranga database now has 30,000 subscribers, with 18 per cent of those from outside the region.
"GrabOne allows businesses to not only promote their business locally but also attract new leads domestically through GrabOne's large network of 13 regions," Mr Brown said. Tauranga Budget Advisory Service manager Marjorie Iliffe said group-buying websites relied on impulse buying, as the deals were only on offer for a short period of time.
"It is an impulse and it's not part of your regular spending.
"Most things you go away and think about it and come back if you still want it. But you don't have the time to do that and that's why it's sneaky.
"It's like gambling - you can only spend what you can afford to lose."
While some deals offered great savings, Mrs Iliffe said it was crucial to spend only what you can afford.
"It's not a bargain if it's something you don't want but it's a good price.
"Make sure that you can afford what you are buying.
"It's easy to put it on the credit card but where's the credit card at? If you are saving $20 on a voucher but it's costing you that in penalties because you have gone over your maximum, it's not worth it."
Mrs Iliffe also warned to take note of the voucher's expiry date. Group-buying vouchers are typically valid for two to three months.
Consumer adviser Maggie Edwards said it was easy to allow vouchers to expire and also advised checking the expiry date.
Read the fine print carefully, she said. Sites often have stipulations about when the voucher can be redeemed.
"We have had trouble with people not reading the fine print about the number [of vouchers] they can buy. You are usually only entitled to buy one voucher, not enough ice creams for the whole family."
Ms Edwards said the Whitcoulls woes had highlighted the risk of vouchers.
When the store went into voluntary liquidation last month, voucher holders were told gift cards could only be accepted if the customer spent the same value on books or other goods.
"We have had trouble with a voucher company which went bust just before Christmas," Ms Edwards said.
"Some of the companies honoured the vouchers, some of them didn't. It was very much an ad hoc arrangement depending on good will of companies."
If customers have trouble redeeming a voucher before its expiry date due to a lack of appointments, they are advised to contact the group-buying deal direct.
GrabOne marketing director Campbell Brown said GrabOne would help customers in such a situation.
"We'll refund it or talk to the business to allow them to book in irrespective of the time. It's something that we're more than happy to try and mitigate," he said.
Western Bay businesses using group-buying sites have found them to be a useful marketing tool.
Sebel Trinity Wharf general manager Gary Dickman said GrabOne deals had been very successful for the Tauranga hotel.
A deal selling two nights at The Sebel for $187 sold 225 vouchers, 65 per cent of which were bought by people outside of Tauranga, mostly from Auckland and Waikato.
"I think it's bringing people to Tauranga," Mr Dickman said.
Other tourism deals to attract out-of-town buyers include a rafting deal on the Kaituna River with Kaitiaki Adventures, which sold 271 vouchers - 32 per cent of which were to customers from outside of Tauranga.
Za Bar/Pizzeria on The Strand has had two deals on the website, and owner Amy Tocker said it had been a positive experience.
"It's a great way for a new business to get a kick-start."