Do “daily deal” websites really offer good value?

Online retail has proved popular during the pandemic. According to McKinsey & Company, e-commerce grew two to five times faster than before the pandemic.

A growing number of South African sites offer discounted products or deals, which claim to save consumers money. This article investigates what you should bear in mind before you click through to the checkout.

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Can you really get the best deal?

Kobus Kleyn, a certified financial planner at Kainos Wealth, says daily deal websites operate on the basis of FOMO, or fear of missing out, particularly when it comes to “one day only” deals. Annual shopping events are exactly the same. The perception of scarcity influences buying decisions.

“People want to believe they can save money by paying less for a product or service, and this justifies the spend if they have disposable income,” he says. “However, the principle of buying a bargain creates a lot of ‘noise’ and, in many cases, people buy something they don’t really need which becomes the next white elephant.”

Gustav Neethling, founder and director of financial services company The Financial Emporium, says these sites employ a “loss leader” strategy – they sell items at a loss to drive customers to buy additional products.

“The focus is on getting you to spend,” he warns. “As with loyalty programmes, ask whether the deals actually benefit you. So many of them are hyped on what are essentially distribution or marketing channels.” 

A “70% off” tagline might be accurate, but it could also mean the original price has been inflated to make the discount viable for the seller.

“If an item is more than 25% cheaper, then it may be worth buying if you really need it, but it’s even better if you can buy with cash rather than credit,” says Kleyn.

Cost aside, you should also consider quality. Be sure to buy a reputable brand that offers durability, and a warranty, so you have access to after-sales service.

Become a savvy buyer

“Most people don’t know the difference between wants and needs, as advertising bombards us with images of what we ‘need’ to create a demand for their products,” says financial planner Sylvia Walker, author of Smartwoman: How to Gain Financial Independence and Create Wealth. “Needs are items we need to survive, like food, clothing, and shelter. Wants are aspirational – a better car, designer clothing, and technology gadgets.

“If one of these items is offered as a daily deal, we may be tempted to splurge. It’s difficult to avoid these types of online ads unless we stop browsing altogether.”

If you understand how advertising works, it’s easier to be a little bit more disciplined, Walker says.

“If an item is something you use regularly and will buy anyway, it’s worth getting. You can also buy gifts throughout the year and consider this your Christmas gift shopping. But do make sure the deal is really a deal. For example, a retailer may mark down your mother’s favourite fragrance by as much as 25% before Mother’s Day or during Women’s Month.”

A good way to avoid the temptation of buying unnecessarily is to refrain from opening daily emails sent by sites. It’s preferable to seek out deals than have them land in your inbox.

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