Monday, July 4, 2011

The Ethics of Groupon-type Websites

Group discount websites such as Groupon, LivingSocial, and DealTicker has been the biggest online phenomena of the past year. Marketers, businesspeople, the investing community, the media, anthropologists, and everybody are wondering if the business is sustainable, if this is a new model of shopping, if the stocks are overvalued and more.

Most importantly, the Average Joe, Jane (or Nyla) are developing new tastes from these group-buying-deals. Consumers are trying things like wine-making, water-skiing or micro-dermabrasion treatments for the first time.

The three reasons behind shaping new consumer habits:
  • Consumers receive a friendly email about the deal for something they hadn't yet perceived a need for, full of clever copywriting and right into their inbox
  • The coupon expires in a few hours, increasing the potential for impulse shopping
  • The prices are often amazing which makes previously unaffordable products and services within everyone's reach
But this is where the problem begins. Group discount websites are making new experience more attainable for the consumer, but isn't being socially responsible whatsoever.

These two deals are from my favorite group-buying site, DealTicker in the last  week:

$9 for a month of unlimited tanning!
To sell this tanning service, DealTicker writes "Do you have the pale pallor of a creature who has just clawed her way out of a crypt? Have those cold Canadian parka entombed winters left you with a deathly glow brighter then Casper’s? Did you abandon your Goth gear years ago yet somehow your skin never got the memo? It’s time to radiant a healthy glow by taking advantage of today's DealTicker of $9 For 30 Days of Unlimited Tanning Courtesy Of Radiance Tanning ($70 Value). There’s nothing wrong with wanting a healthy tone to your flesh."

Nothing except skin cancer. At a really great price. Tanning has been dubbed the new "smoking" due to its detrimental health effects and risk of skin cancer. Not to mention, making it "unlimited for a month" may tempt many to milk the deal by going way too many times in a single month.

And if the tanning one wasn't all that bad, here's one for $110 worth of smoking accessories:

$29 for $110 of "smoking accessories"

This one isn't even ethically questionable. Smoking is the original "smoking" and we are all extremely familiar with the strict smoking regulation that exists in Canada (and with good reason).

On this gem, DealTicker writes "From pipes and bongs, to vaporizers and rollies, they really do have absolutely everything you could ever imagine when it comes to smoking. So instead of wasting time trying to find a smoke shop that is relatively close by, you could just simply have your items shipped straight to your door. The best part is that when your order arrives, it will be packaged in a discreet plain carton box, so that your right to privacy is respected."

So you can smoke your pot without having your mom, roommates or wife find out. Just when you thought cigarettes were no longer sexy, DealTicker brings lung cancer back at an affordable price.  It says you have to be of legal age to smoke to purchase this deal, but how do they even monitor this? The final sentence to the article reads, "if you really want to discover a new smoking experience, then take a puff from today’s cross country DealTicker, and you’ll quickly be able to get your fix."

What do you think of these types of online discounts?


    1. Love the article (:

      I guess you can put just about anything online. Definitely doubt the legitimacy of "Smokers Corner". But, perhaps it's not the discount website's responsibility to police the ethics of its users? Yes, they have the responsibility of monitoring and approving their clients' - the retailers - activity, as far as legality and legitimacy goes, but perhaps the site is not at fault for what the retailers choose to advertise.

      From a different perspective, the users (it is assumed) have the discretion to make purchases based on their own set of ethical standards, moral values, tastes, and financial abilities. So if Joe, Jane, or Nyla chooses to buy a bong online, so be it. And if the Groupon/Teambuy/Red Flag Deals/etc. community finds such offers offensive or unethical, then perhaps their inaction (by not participating in the deal) will sufficiently eliminate these offerings by nature of their unpopular and unprofitable results for the retailer.

    2. Even though the users have the ability to buy or not buy from a particular website, should the website not adhere to some kind of moral code? For example, saying things like "there is nothing wrong with a healthy glow" is flat-out advertising a harmful lie.

    3. A perennial problem with all new on-line business ventures is the need to build revenues and market share as rapidly as possible, as opposed to the traditional model of the small start-up that slowly builds its revenues over time. With the latter there is a strong interest in building the value of the business by establishing a good reputation for ethical conduct. As you've noted, firms like Groupon need to quickly generate customer excitement through impulse buying and dangerous products.

      Internet giants like Google that have already gone through the cycle of "grow the business very large very rapidly" are now facing an array of ethical problems. On-line firms have learned how to use Google's algorithms to direct search results to client companies so that they are the first or second company listed. Google Books was fast-tracked into operation before problems related to compensation/royalties for authors had been worked out. Facebook has had to face a number of issues related to client privacy.

      Because these firms have pushed their operations to the edge of legal compliance because of the nature of the their business model, they are now rapidly escalating the fees they pay to lobbying firms in Washington to ensure that legislators take an accommodating attitude to their business practices. Let's hope that Groupon and others will avoid this fate that has taken over Apple, Google, Facebook and others, but I for one am not too optimistic.

    4. Or sometimes wwe know and ignore it or don't move to action to develop our talent(s).
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