What is group buying?
Group buying sites like Scoopon, Spreets, deals.com.au, Cudo, JumpOnIt, LivingSocial, Our Deal, Ouffer and Groupon are popular in Australia. They 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.
Fair Trading has received a number of enquiries and complaints about group buying, particularly for things to do with hair, beauty and personal care services, restaurants and cleaning services. Common complaints include non-supply and incomplete supply of goods or services, and difficulty in booking services and redeeming vouchers.
How does group buying work?
Many group buying websites negotiate deals with local businesses in exchange for big discounts. If you want to buy an offer, you must enter your payment details online. You’ll then receive a voucher to claim your purchase with the business directly. Lots of these websites require online membership and deals are sent via email or social media.
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 goods 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 because you will generally receive a product or service directly, rather than a voucher.
Under the Australian Consumer Law, it’s an offence for a business to accept payment for goods or services and not supply them within a reasonable period.
Tips for consumers
If you’re considering buying from a daily deals or group website you should:
- be aware of what goods 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.
What to do if your group buying deal goes wrong
If you have trouble redeeming the voucher or unreasonable delays in booking in, contact the group buying website to seek a refund.
If you are not satisfied with their response, you can lodge a complaint with NSW Fair Trading.
Tips for small businesses considering group buying offers
If you’re thinking of offering deals with a website, you should:
- consider the potential demand and whether your business can deliver those services on time and in a reasonable manner.
- 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.