I've discovered another exception to the "If it seems too good to be true, it probably is" rule. The first was cash-back shopping. The new one? Social buying.
So-called social-commerce sites like SocialBuy, Groupon, LivingSocial and BuyWithMe let you score services or products for up to 90% off through the power of bulk discounts.
Of course, you shouldn't buy if you can't afford to spend right now. But social buying is a great way to save on things you've budgeted for, whether that's a haircut or a night out with friends.
BuyWithMe underwrites the social life of Jonathan Hines, a software engineer who lives just outside Boston. "When you have a (deal), the night goes on a lot longer," Hines says.
He considers social buying a no-brainer: "Why wouldn't you use it? The deals are there!"
How it works
Social-commerce sites promote their offers through social media and direct e-mails to members. (There's no cost to join.)Usually the deals are local, but not always. For example, Jasmere contracts with specialty retailers that ship nationwide.
Some sites offer additional incentives. At eWinWin, the discount becomes deeper as more people sign up. For example, Smoothie King started out with a 45% discount but wound up offering 84% off.
LivingSocial will give you the daily deal for free if you persuade three other people to buy it. This viral marketing lets a company reach many thousands of potential buyers in a very short time.
"Consumers get a great deal, and local businesses are getting people through the door," says LivingSocial CEO Tim O'Shaughnessy.
'Discover local gems'
The most common deals are for restaurants, salons and spas. Discounts to these places help encourage people who are nervous about spending to open up their wallets during a recession. That was the idea behind SocialBuy, says co-founder Eli Natan."We're offering the things people want to do but maybe can't afford right now," he says.
Persuade a bar to offer $5 martinis and you'll pack the place, even on a Tuesday night, Natan says. SocialBuy has also drawn thousands of customers to hockey and basketball games, dessert shops, spas, restaurants and a fire-juggling class.
Social commerce abounds in nonessential but nifty experiences. A few examples I found: auto detailing, yoga classes, "flightseeing," indoor skydiving, city tours, fitness boot camps, rock climbing, trail rides, museum memberships and tattoos.
Groupon founder Andrew Mason sees social buying as way to help people "discover local gems."
"The idea is that you're exposing people to new (experiences)," Mason says.
Austin, Texas, newcomer Stephanie Hackney says Groupon has helped her and her husband get to know their new home. Among other things, they've enjoyed a Segway tour, a museum membership, a wine tasting, and minor-league hockey and baseball games.
"This is a much less expensive way of trying new places," says Hackney, who recently took a trapeze class with a $39 Groupon deal.
Continued: 'Getting our brand out there'