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Spending Smart

Shoppers of the world, unite

Collective-buying websites give individuals the power of the group discount

By Jenn Abelson
Globe Staff / June 14, 2009
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Here's one way to stop feeling guilty about shopping during the recession: Get on the computer and buy with friends - or even strangers - and receive deep discounts on local products and services.

A growing number of websites are capitalizing on a new collective buying trend that offers promotions to groups of online shoppers. Over the past six months, two sites have launched that are tailored for the Boston area, BuyWithMe.com and Groupon.com.

These sites feature various promotions - from spa packages to whale watching tickets to health club passes - that are available to shoppers for a limited time if a certain number of consumers purchase the deal. Interested shoppers provide their credit card information and are only charged when the threshold is met. Merchants offering the promotions typically determine the number of discounts available and how many people are required to make the deal valid. These sites often are tied into social media networking, allowing consumers to share the deals through Facebook and Twitter.

Since it launched last month, BuyWithMe says it has saved consumers more than $80,000. The debut deal was a $285 Grettacole spa package marked down to $99.75, which included a massage, facial, manicure, and pedicure. Patriots Pro Shop in Foxborough offered a $64.95 Belichick sweatshirt for $34.47. Other promotions included a $20 gift card to UFood restaurants for just $9 and day passes for two at Rock Spot Climbing for $20 instead of the usual $72 price tag. Gretta and UFood required a minimum of 50 buyers, and RockSpot needed 15. All of the deals significantly exceeded the minimum, but BuyWithMe would not provide specifics.

Julianna Kaden, 36, of Wellesley, was one of the first customers to purchase the Gretta Cole spa package, along with her sister.

"Collective buying allows the consumer to get the benefit of the buying power of a group of people and get much better deals than a merchant would give you as an individual consumer," Kaden said. "The deals are limited in size, too, so there is a bit of the feeling that you want to get it before it is gone."

Groupon appeals to this limited-time-offer mentality with a ticker counting down how much time is left before the deal expires. The company debuted in Chicago last year and launched its Boston site in March.

The business boasts nearly 200,000 subscribers, who receive daily alerts of new deals, with more than 40,000 in the Boston area. Groupon's site also lists the number of people who have signed up for individual promotions so shoppers can keep track of how many more must be sold to make the discount a success.

Over the past few months, Groupon has sold nearly 1,500 Melt Spa & Salon gift certificates worth $125, but priced at only $50. And more than 2,500 consumers purchased Cape Ann Whale Watch tickets for $20 when they usually cost $45.

"By focusing on one great thing each day and using the crowd to negotiate an unbeatable price, we made it simple to get out there and take advantage of the stuff in our city," said Andrew Mason, Groupon's founder and chief executive.

These sites make sense for savvy shoppers because the value is validated, according to Mike Tesler, president of Retail Concepts in Norwell.

"Consumers do not believe and trust words such as 'sale' and 'special' because they are so overused and misused. But they respond to sites that can explain reasons why they offer a better price," Tesler said.

Jenn Abelson can be reached at abelson@globe.com.