Last December, Google offered to buy the website Groupon for £4bn. That's such a staggeringly huge amount of money you would have thought just about anyone would have agreed the deal on the spot. Not Andrew Mason, the founder of site. He turned it down because he figured it wasn't enough: he thinks Groupon has the potential to be worth much, much more than £4bn.
So where is all this value coming from? Discount shopping. Groupon gathers large groups of people together and gets them buying in bulk for very low prices. It works like this: you commit to buy a product or a service from the site and register your payment details. Then once a critical mass of people have signed up ie enough to make the retailer feel the business is worth offering a hefty discount the deal will go through and your payment will be taken. If not enough people sign up, the deal is cancelled and you aren't charged.
It sounds good; it has been a huge hit in the US; and its managers hope it can be here too. However if it is real moneysaving you are after in this 'age of austerity' I'm not convinced Groupon is the place for you. Why? The deals aren't quite right.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
For example, one of today's deals is eight sessions of IPL hair reduction for £99 instead of £660. But if you are trying to save money you probably won't be spending £100 on hair removal. You'll be getting a razor instead. And you won't be booking a Pilates course. You'll be getting a book instead. There are some restaurant deals available which is nice. But why bother signing up for a group deal and hoping other people will sign up too when you can just take advantage of the numerous two-for-one deals available elsewhere right away?
Latest Videos FromMoneyWeek
Enjoying this article? Sign up for our free weekly email, MoneyWeek Saver, to receive free weekly personal finance tips and insight direct to your inbox from our expert, Ruth Jackson. Sign up to MoneyWeek Saver here
Overall if you are looking for discount deals I reckon there are much better websites you can choose. Here are four of the best:
Incahoot
Like Groupon, Incahoot uses the power of bulk buying to deliver bargains. But this website targets that power at utilities. You'll find deals on home broadband, mobile phones and energy bills. For example, today they are offering home broadband for £4.49 a month with Plusnet that's £2 a month cheaper than Plusnet's standard deal. They've also got discounted iPhone contracts with network provider Three.
Quidco
This, the biggest and best of the cashback websites, can earn you a small fortune £700 a year, according to The Sunday Telegraph. You sign up to the website and then, when you want to buy something online go to the Quidco site and shop with one of their 'retail partners' which include most of the big name websites you'd usually shop with and when you buy something Quidco will give you a cut of the commission they'll receive from the store. Right now you can get £70 cashback if you buy Aviva car insurance through Quidco, or 7% cashback with House of Fraser.
Better still, Quidco have introduced a facility so you can register your debit or credit card with them and so earn cashback when you are out and about shopping. At present you could earn 2% cashback in Debenhams or B&Q and 4.5% in Halfords, Cineworld or Country Casuals. That makes it well worth taking the few minutes to register your card (assuming you don't mind your personal data being registered in yet another place).
MyVoucherCodes
Before you buy anything online even through Quidco check MyVoucherCodes to see if there is a code you can use to get a discount on your purchases. Not only can you search by store, you can also search by product. So, for example, I tapped in 'fridge' and found deals offering me up to £50 off.
Mysupermarket
Finally, use Mysupermarket to save yourself a fortune on your food shopping. Shop via the website and, while you are filling your virtual basket with goods from your usual supermarket it will tell you how much your basket would cost at any of the big four Ocado (Waitrose), Tesco, Sainsbury's and Asda. You can save yourself around 10% off the cost of your shopping using the site. Once you've finished and picked which store you want to shop with, you can either order your shop online there and then or print out your list to use later.
This article is taken from our weekly MoneyWeek Saver email. Sign up to MoneyWeek Saver here
