Too Good To Be True?

by Cameron on September 26, 2011

“If it sounds too good to be true, it probably is.” Everyone has heard this saying. Everyone to some degree probably lives by it. I am here to convince you not to live by it, at least when it comes to some deals. Companies fail all of the time. Many of these company fails can be attributed to mispriced products. Companies such as LivingSocial.com take losses on some deal coupons in an effort to compete with its larger rival, Groupon, and gain subscribers to profit from later deals. LivingSocial is the 2nd most successful company in the “daily deals” area, or “local commerce” area as CEO Tim O’Shaghnessy calls it. According to Bloomberg, Groupon has spurred over 700 imitators. This year alone, over 170 daily deal sites were closed or sold, according to researcher Yipit.

Daily deal sites most frequently offer discounts on spas and restaurants. Bargains in these two areas alone are not enough to create the traffic they need to maintain their business. Therefore, these sites must get creative and find ways to branch out from the normal spa and restaurant discount offers. Groupon dominates this daily deal market, pulling in over $688 million of revenue. The next largest in the market, LivingSocial, pulls in barely 1/3 of Groupons revenue. However, both of these companies have been successful in breaking away from the spa and restaurant offers. Groupon offered over 10,000 deals last year, and LivingSocial offered over 5,000. Not all of these deals are profitable for the firms.

Outside of the daily deal market, other companies are also failing due to the economy, as well as other internal flaws. Companies are being forced to run huge sales in an attempt to stay afloat. Companies that can no longer survive are being forced to liquidate their merchandise. Goody’s, MovieWorld and Borders are examples of companies that have had to liquidate their merchandise in the past year. There is nothing wrong with you taking advantage of the deals offered by the misfortune of these companies. Cutting expenses will only make your finances more stable. I have begun to look for companies with mispriced items rather than look for sales. Make sure the company you are dealing with is a reputable company. Once you know the company is good, don’t shy away from a deal just because it looks too good. The downfall of these companies can be the savior to your budget. Change your motto from “too good to be true” to “too good to pass up.” (always check to make sure the company you are dealing with is not a scam before giving them any information, especially over the internet or phone).

 

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  • Mark Fitzgerald

    Great tip…thanks for adding this kind of information to your blog!

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