Posted by: The Saffa Mom | May 31, 2011

A lesson in Social Buying.

Social buying is definitely the new trend word coming through. For those of you not privy to this new way of finding bargains, it is all about economies of scale.

A special is declared, generally 50% off the original price (it can sometime be even more). It is only effective if more than a certain amount of people purchase it within a certain amount of time. At the end of that period you either have a deal, and your credit card is debited- or you don’t have a deal. There you have it- Social buying.

I must admit, I am a sucker- or maybe I was. I get an email most days from a few… namely: Groupon; Ubuntu Deal; Collective Cow; Wicount; Zappon and Vuvuplaza, and in fact, I have bought a few things through some of the sites mentioned. My experiences, have been varied.

The first special I bought was for a weekend away. Just off the Game reserve in the Krugersdorp area. That should have rung bells. The fact is it was too good to be true. The lodge was 4 stars! The pictures definitely showed a 4 star lodge. (Talented photographer-Perhaps he should advertise.)  

Well, I can honestly say that the people who hand out the starts must have been pissed at the time! Or paid.

We arrived just before lunch time, and had to wait as our room was not ready. That is not so bad……. understandable at times. Eventually we were shown to our room. My knight was not very impressed as he had to carry ALL our luggage (I am sure a 4 star place arranges that for you?)- about 700 metres. Our room’s air conditioner did not work, the bar fridge was off and empty. (We then discovered that did not work either.) There were two towels in the bathroom, when I had been very specific about being three of us, and only a bath. The two double beds were a complete shocker- the type that when you sit on the edge, you fall into the middle. Lumps cushioning the springs coming through.

That afternoon, we took a drive to the Game Reserve, to kill some time. My expectations were clearly to high. The only other Game Reserve I have been to, over 20 times, is the Kruger Park…… you see the problem. Krugersdorp was done and dusted within an hour. The most special moment in the trip was seeing two rainbows next to each other- the first time ever.

That night we did not sleep, and left the next morning before breakfast to just get back to our home. Our country home, that feels like a holiday resort. My Knight refused to take a bath, and My Princess and I did though standing. (He is far more pedantic.) When I checked out, a few hours after I checked in, not a single question was asked. Not- how was your stay? Not- is there a reason why you are leaving so early? Not- are you not staying for breakfast? Not- not- not. Is that NOT strange? Especially considering they are a 4 star lodge.

I am sure My Princess had no idea what happened to our holiday…. and my knight will never let me live that down.  In fact, it scared him off the social buying front completely.

The other purchases I have made have included a meal  for two at a Greek restaurant in Eastgate (Greek food is officially my favourite- still to use); a morning makeup course (would we all not want to know how to apply our make up perfectly- still to use); and a course of underarm lazer hair removal (what can I say?- have had 3 sessions and intend on slowly tackling every hair on my body.)

From back of house, until recently, I presumed that the SOCIAL BUYING MEDIUM earned a certain percentage, probably about 10%, and even though the SELLER had discounted their prices drastically, they would at least benefit from the advertising and brand awareness taking place. Not so bad.

Presumption is the mother of all f*&% ups though. Or should I perhaps say: “Ignorance is the mother of presumption” (Marie de Gournay)

The cost of Social Buying is actually quite high to the seller. They do not only loose 10% of their sale price, but  actually a whole 50%. That doesn’t sound too too bad…until you consider that they already had to cut their price by 50% to start off with. Effectively they are earning 25% of what they originally may have received. Would the advertising have cost that much? Would they actually be able to pay the costs of the product they are selling? Or the service being offered?

Lucky for my lazer technician- I hate hair, and love her pain free lazer machine, so she has perhaps gained a client for life or as long as it takes to be hair free. The 4 star lodge may have put us in the worst room available, and potentially lost a client for life, but they still have staff and expenses to pay. Most restaurants work on a 35% food cost… so the restaurant has lost out on our meal- hopefully we drink! And the makeup course…. I will be using makeup to learn- her makeup, and of course her Saturday morning.

All these purchases were made before I knew how things really work. My attitude has changed somewhat since. My thoughts- These people are working for free. Almost. Will I feel obliged to increase the sale? Will I up it? Will I get the service I would have if I had paid the full price? Will my prawns be shrimps, or will they really be Queens? Will I get placed in the dodgiest part of the restaurant or will i be on the balcony? Will I get the top therapist, or the student? Will I be treated like a potential life long client, or discriminated for liking bargains?

It will be interesting to see how the Social Buying card plays out.

As a seller, I may never be brave enough to advertise through any of them, and as a buyer am no longer very enthusiastic about my next purchase.

My advice to all:

Before you do make a purchase, do your research. Learn through my mistakes. The reason why something may be dirt cheap, is because you may end up in the dirt. Check it out first. The internet is a never ending source of information. A few minutes of Googling may save you some cash, but more importantly- disappointment. Check out prices before you just go for that bargain. Many seller shave resorted to using inflated prices to begin with (who could blame them). Any person gets a little giddy when they see a sale of 50% off, however you may realise that many times the original price is just 50% higher than everyone else!

And perhaps the most important bit of advice:

Never ever purchase a special on BOTOX treatments; or anything that should be performed by a qualified doctor, instead of a person who is trying to increase their customer base.  

If the results end up anything like our little trip, well, you may not only be questioning who gives out the stars.

xx

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Responses

  1. You should name the lodge.

    • I was just waiting for someone to ask……Mogale Lodge.
      xx

  2. You got me totally confused here! I think I might join your knight and close my eyes, cover my ears and yell lalalalalala I can’t hear you!
    In my defense I am totally stressed today. My thinking and understanding are at a low ebb.

  3. Ok as a retailer I will speak up. Yes, typically on these types of promotions, the coupon company collects roughly 1/2 of the proceeds that are taken in. So, you are correct, if the business is offering a 50% discount then giving up 1/2 of the sale price, they are not bringing in much revenue. As I understand it the purpose of these promotions is either to make some profit because the volume is so high, or to generate a customer base that continues to come back. Regardless, there are not a lot of small businesses that can afford these kind of ridiculous cash losing promotions. BUT it is a trend that is here to stay!

    Sorry the trip didn’t work out!!

  4. LOL at the botox comment. Haven’t tried it. Won’t be now for sure. 🙂

  5. I’ve never been to those sites but I did come across one specific to restaurants. You can buy “gift cards” for a fraction of face value, but there are so many conditions (strings attached) that you would end up paying more than the value of the card in the end. Effectively, you “saved” about 45% of the bill, but the bill is much higher than you would have normally eaten out for. If it was me, my hubby, and another couple – it might be worth it since the amount to be spent would natually be higher. Drinks not included either.
    xxx

  6. Now we have new terms for over-buying? Great!

    • I dont know how you can compare this? I think it is more like trying to over sell.
      xx


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