Group buying trend

Groupon, Tuango, Linving social, Dealfinder, Dailydeal.com, all those sites are part of the big social media marketing trend that’s group buying. The trend originated in China where tuángòu or team buying allowed to get discount prices from retailer when a large group of people were willing to buy the same item. Nowadays, the whole world had adopted the trend and some of those group buying sites have had a triple digit growth rate in the past couple years.

How does it work?

The concept is fairly simple: group-buying sites contact local businesses willing to offer big discounts online. Each site sends its subscribers a daily e-mail with the deal and a description of the business offering the deal, the minimum number of purchasers required for the deal and the time remaining. If enough people buy, the deal is "on" and purchasers can use their coupons to get the service they paid for.

Why does it work?

For customers, group buying gives access to exceptional discounts that allow the coupon buyer to experience services that would be otherwise inaccessible or too expensive, it allows the customer to discover new restaurants, new spas, new shops and new activities. For the seller, it is a “free” marketing and promotional tool that allows businesses to get their business known by all the subscribers of the deal’s website and getting them to try the service or product offered for a cheap price, hoping those customer will return in the future. It also works for luxury businesses such as spas or fancy restaurants by providing them with the opportunity to fill their tables. Finally, it is a great way to get rid off excess inventory especially when the holding cost is higher than the loss from selling at a discount.

A lot of new websites are appearing everyday and a lot of people are now questioning whether the business has a future but what is certain is that group buying has definitely changed the way Canadians buy and customers now think twice before paying full price.

http://www.canadaone.com/ezine/apr11/group_on.html
http://www.theglobeandmail.com/globe-investor/personal-finance/home-cents/im-not-yet-buying-the-group-buy-trend/article4327638/
http://www.wazua.co.ke/inner.aspx?sec=groups&aid=74