The "group deals" scene in Australia continues to flourish with new entrants on an almost-weekly basis. Everyone loves scoring a bargain, but do retailers risk long-term damage if they sell experiences or tickets through a group deal after already selling some of them at full price?
One obvious way where group buys can go wrong is if the offer proves so popular that the advertiser can't supply everyone who wants to sign up, but there isn't an adequate system in place to ensure that customers don't keep trying to buy. That happened to Cudo last year in an incident which might lamely be referred to as Cupcakegate.
That sort of issue can be managed by ensuring that if there's an upper limit on a potential deal, it gets removed from the site. But as Lifehacker reader Kanthan pointed out to me recently, some group deals can leave a bad
Kanthan wrote in last week to point out that music festival Good Vibrations was selling half-price seats through Spreets. The Sydney event has come and gone, and the allocation to Spreets sold out.
As Kanthan put it:
This is a massive slap in the face for the loyal supporters who bought early at double the cost. It's one thing having discounts with retailers during not so busy periods, but when there are other people out there who have bought the identical product at a higher cost, it just tells the loyal supporters that the business does not care.
Discounted tickets for entertainment events are nothing new; I'll freely own up to having gone to concerts in the past purely after getting an email announcing a new and lower price. But that has always been for seated events. At least in those cases the people who paid up earlier might have the satisfaction of knowing they got a better position.
That doesn't work with music festivals, where as a rule all the tickets are essentially equivalent. The fan who buys on the first day of sale gets the exact same service as the bargain hunter who buys two days out. Having a large crowd helps with atmosphere, but having a bitter segment of that crowd doesn't.
As well as annoying people who were willing to pay full price, selling tickets this way could kick off a vicious cycle of unprofitability. Fewer fans will buy up front, assuming there'll be a discount at some point, and the whole thing could collapse. Large department stores like Myer often complain these days of customers not buying goods at full price because they expect a sale to come along soon; it would be a shame if the music festival business went the same way.
Obviously, businesses are free to choose any legal strategy they like to promote their goods, and to sell them at whatever price they want. A group buy approach might seem appealing, but businesses need to be mindful of the consequences in terms of how they are perceived by all their customers, not just the ones which score a bargain. Thanks Kanthan for the tip!
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