NEW YORK (MainStreet) -- More from the growing annals of why daily deal sites aren't such a good deal, after all.
New research out from Kansas State University echoes much that has already been said about those ubiquitous daily deals: the sites like Groupon and Living Social may actually hurt the businesses that offer them, and contribute to impulse buying among consumers who can't afford the purchases.
Fear of impulse buying hasn’t stopping consumers from partaking in the daily deal experience yet.
According to a 2012 report from Edison Research, about one in six Americans now are members of at least one daily deal service.
Some other pieces of data from the Edison study:
• Women outnumber men as daily users by 66% to 34%
• 70% of users are between the ages of 25 and 54
• Groupon and Living Social are the most popular daily deal websites
• More than half of all daily users registered with a service in the past year
• More than three-in-five users amp up usage once they’ve completed one daily deal
However, consumers, and the businesses that provide the deals, may be in over their heads in adopting the daily deal format for buying and selling.
That’s the sentiment expressed in the Kansas State study, compiled by marketing professor Ether Swilley. She concludes both businesses and consumers should think twice before participating in daily deal programs.
For consumers, Swilley's advice is about making hasty decisions. "I would advise users to use discretion. Make sure it's something you really need or want, and you're not just purchasing it because it's there and time is counting down."
For businesses, the trick is getting people to come back and be regular customers –- no easy task via daily deal discounts. Professor Swilley says that companies will deeply discount products or services with the hope that the deal will open a gateway for regular customers.
"What's happening, though, is that people aren't coming back after that initial coupon use," she explains. "They think, 'this was cheap the first time, I want it to be cheap again.' They're not really gaining a true customer but simply a one-time user who is deal-prone. Now retailers are reconsidering the value of Web coupons."
Maybe a better potential marriage between retailers and consumers are so-called “flash sale” sites.
Such sites, like Gilt.com, lure customers with deeply discounted deals if they buy a product or service in a short, predetermined period of time. Consumers get the big discounts, and businesses get a chance to unload excess inventory or to test out a new product or service on flash sale sites.
"Flash sale websites are often used as a marketing tool," Swilley adds. "If a company has a new product coming out, they may want to see how the public feels about it. They use a flash sale to lower the price a bit so that a few people will buy it and get it out there. Then, when someone asks where you bought your shoes, they can go to the store and purchase them."
The advice for consumers hasn't really changed whether it's with a daily deals or flash sales site -- buyer beware.
"You may see a pair of shoes that is marked down to $500 from $1,600," Swilley says. "Yes, it's a discount, but would you have seriously considered an expensive pair of shoes if the picture wasn't in front of you?"
Better to switch your strategy and shop for needed items by canvassing the web, and not waiting for a deal to come to you, Swilley advises. An area where daily deals may work well is last-minute travel deals (if you’re not particular about where you’re going) or when purchasing high-end items, where 20% to 50% savings really add up.
Finally, from a consumer point of view, it’s better to seek out the deal than have it seek out you.