Impulse Buying 2.0: Groupon’s New Deals Tempt Anyone Who’s Hungry or Bored Right Now

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Groupon, the runaway leader in the enormously popular group daily deals concept, is aiming to once again upend the way consumers leap for tempting, limited-time offers.

Groupon’s new service is called Groupon Now, and the BusinessWeek story introducing it claims that the tool could wind up being “a combination Yellow Pages, Valpak coupon packet, and price-conscious concierge for millions of consumers” all in one.

Here’s how it’s expected to work. Using Groupon Now via computer or smartphone, you’ll see two options: “I’m Hungry,” and “I’m Bored.” You click on one, and nearby deals will appear—say $20 worth of Thai food for $12. Unlike Groupon’s classic deals (I can’t believe I’m calling them “classic”; they’ve only been around for a couple years), which can generally be used anytime during a several-month window of time, Groupon Now deals are only valid on that particular day, during very particular hours.

You can guess when these hours will be (hint: not during peak lunch or dinner time). For restaurants and businesses, Groupon Now is attractive because the deals could provide a surge of revenues during otherwise slow periods—while at the same time not cutting into any business’s most lucrative hours.

While restaurants get to fill up tables that otherwise wouldn’t have been filled, the consumer gets a discount in exchange for eating during off-peak hours. You can picture entire eateries filled for lunch at 11 a.m. or 3 p.m.—all with Groupon Now customers hungry for deals (and presumably, food too).

In the BW story, Groupon president Rob Solomon explains that the goal for business owners would be to offer these discounts in order to use up food and other perishable inventory that otherwise would be wasted:

“If we can eliminate 10 percent of perishability, we can change the dynamics for small business owners,” he says. Small businesses would become more like airlines, matching supply against demand to maximize revenues. “If we get this right,” Solomon says, “we are going to influence what tens of millions of people are buying at a frequency that we have never seen before.”

The new service might only transform small businesses; it could transform the concept of impulse purchasing. To some extent, Groupon and its copycats have already done so, creating legions of e-shoppers who simply can’t turn down $10 off limited-time deals. Some of these “classic” deal enthusiasts have been known to suffer from “Groupon remorse,” which occurs when the realization sets in that you didn’t really want the product or service you bought via Groupon, even if it was $10 or $20 off. This all-too-common scenario has inspired the rise of sites such as Lifesta and Yipit, which allow regretful daily-deal buyers to resell their coupons.

It’s unclear how many of the “classic” daily deals are bought but never used. Some estimates put the figure at 20% or even 30%. The deal sites and businesses involved have to love that—it’s pure profit, with no services rendered—but for customers, this is obviously less than ideal. With Groupon Now, however, it’s reasonable to assume that every purchase would be used by the purchaser. The deals have to be used right away, after all, so why would you buy one unless you knew you could take advantage immediately?

So at least money spent on these new kind of group coupons won’t be totally wasted. That’s not to say some of this spending won’t be wasteful. What Groupon Now really does is make impulse buying more impulsive than ever. To take advantage, you must buy—and consume—right away. And we all know that people don’t make the best decisions when they’re hungry or bored.

Q&A with Founder Andrew Mason
When ‘What a Deal’ Is Followed by ‘Why Did I Buy That?’