Online coupon sites leave sellers stunned

Deals: Stalking the Web and spreading the message, bargain hunters overwhelm businesses intending to give discounts to a relative few.

March 13, 2000|By Dawn Fallik | Dawn Fallik,Special to the Sun

When the owner of the Freedom Candle emporium in Granby, Conn., wanted more people to visit his store's Web site, he thought it would be a good idea to offer a free votive as a sample.

He posted the offer in September and was getting about 12 requests a week until January, when someone put a note about the "freebie" on a Web site for online deals.

"Suddenly we had 14,000 hits in, like, a day," said proprietor Michael St. Louis. "Luckily, our mailbox is limited to 1,000 letters."

Freedom Candle owed its unexpected, and not entirely welcome, success to Web sites such as and, which popped up on banner ads across the Internet a few months before Christmas, as online stores began vying for cyberdollars.

These sites spread the word about free offers, coupons and rebates. When an offer is good enough, it can cause a stampede. Merchants complain that the very nature of cybercoupons makes abuse hard to control.

Here's how the system works: Instead of printing a paper coupon, an online merchant will send targeted customers a "code," usually a password such as "HAPPYDAY," to type into an online order form when they're ready to conclude a purchase. The code tells the company's computer to reduce the total price by a specific amount or percentage.

The problem is that the original codes were often aimed at particular customers, either first-time arrivals on a site or those involved with another promotion (apply for a Discover card, get a $15 coupon good on

When a coupon code meant for 100 specific customers spreads to 10,000 people on a bargain hunter's Web site, chaos ensues. Two months after the deluge, St. Louis is still filling orders for free samples made on that January day.

"We've probably sent out 500 candles," he said. "We'll probably lose about $4,000 from manpower and mailing and candles."

Joel Comm is president of InfoMedia Inc., a company in Edmond, Okla., that oversees two coupon sites, and www.

These sites earn money because Web merchants pay for each customer the sites refer to them. Comm says most people are honest about the coupons and Web sites are finding ways to combat abuse.

"We try to be careful about the things people post on the [bulletin] boards," he said. "Sometimes someone will post a single-use coupon and the merchant will get upset and ask us to pull the post because they're getting slammed. And we're happy to comply because we don't want to cause problems for the company."

John McCann, a Duke University professor who teaches a course in electronic commerce, said companies could limit coupon usage. "Web sites could make the offer good for only the first thousand people or so, and make that clear to consumers.. That way it would be a controlled distribution."

Customers say there are so many coupons on the Web that there's no need to abuse them.

Karen Webb of Bethesda says she rarely pays for anything but shipping when she buys online. She has received free first-aid kits, beauty products and magazines using online coupons. In fact, bargain hunting has become an addiction she's trying to conquer.

"If you saw me, you wouldn't think I have that kind of personality," she said. "But it's like a challenge. I get so excited when I find a really good deal."

Los Angeles resident Kim Everett-Martin makes her living trading on and shops on the Internet. Although she's discovered several new Web sites through the coupons, whether she goes back and pays full price for later purchases depends on the customer service she receives with the original offer.

"There was a '$10 off' order for and they had a gift wrap caddy on sale down from $35 to $10. After I ordered it, I got an e-mail asking me to call them because the coupon I used was not supposed to have been released to the public," she said. "But they honored the coupon and even sent me a silver frame because it took so long for them to send me the caddy. I'd definitely order from them again."

Some e-companies won't honor coupons obtained through freebie Web sites. Customers will receive their order -- with the full price charged to their credit card. Other companies shut down the coupon offer if too many people respond.

"Web sites have a choice. They can lose some money and honor the coupons, or they can turn away the customer," said Comm of InfoMedia. "But if they do that, they're taking the chance of losing that customer forever because there is so much competition out there."

Webb is one of those customers. She found a $10-off coupon for and placed an order as a first-time customer. Then she received an e-mail from the company saying that the coupon was not supposed to be released and would not be honored.

"I sent them back an e-mail because I really felt that they should have honored the deal," Webb said. "I wasn't desperate for the order or anything. I just felt it was really bad customer service."

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