In 2000, with financial backing from Microsoft, co-founder Paul Allen started an e-commerce start-up called Mercata with a business plan dubbed "We Commerce". The website offered high-end electronic deals to shoppers online. Individual web shoppers would sign up en-masse to buy the same product and the price of the product would fall as more people signed up to buy it. However, the website was shut down in 2001 as it could not compete with websites like Amazon.com.[2]
Recently, group buying has been taken online in numerous forms, although group buys prior to 2009 usually referred to the grouping of industrial products for the wholesale market (especially in China). Modern day online group buys are a variation of the tuÃngÃu buying that occurs in China.[3][4] Under tuÃngÃu, an item must be bought in a minimum quantity or dollar amount, otherwise the seller will not allow the purchase. Since individuals typically do not need multiples of one item or do not have the resources to buy in bulk, group buys allow people to invite others to purchase in bulk jointly. These group buys, often result in better prices for individual buyers or ensure that a scarce or obscure item is available for sale. Group buys were, in the past, often organized by like-minded online shoppers through Internet forums. Now these shoppers have also started to leverage the group buying model for purposes of buying other consumer durables. Group buying sites are back in demand as small businesses look for ways to promote their products to budget-conscious consumers in a weak global economy.[5] Group buying is also used for purchasing real estate properties. Real Estate Group Buying is very popular in India where websites like Group Bookings [6] offers group deals on various properties.
In China, group buys usually happened when dealing with industrial items such as single-board computers.[7] China had over 1,215 group-buying sites at the end of August 2010 compared with only 100 in March of the same year.[citation needed]English-language group-buying platforms are also becoming popular. Online group buying gained prominence in other parts of Asia during 2010 with new websites in Taiwan, Singapore, Hong Kong, Thailand, Malaysia and the Philippines.
Google launched their own daily deals site in 2011 called "Google Offers" after its $6 billion acquisition offer to Groupon was rejected. Google Offers functions much like Groupon as well as its competitor LivingSocial. Users receive daily emails with local deals, which carry some preset time limit. When the deal reaches the minimum number of customers, all the users will receive the deal. The business model will remain the same.[8]Facebook's 'Facebook deals' application was launched in five European countries in January 2011. The application works on a similar group buying model.[9]
If subscribers to a discount website are tempted by a discount offer, they enter their payment details online and wait. When a minimum number of people sign up for the same offer, the deal is confirmed and a voucher is sent to their inboxes. Shops, restaurants and other retailers that partner with these discount websites have to take hefty price cuts. But it means they have instant access to a whole new group of customers.[10] The online group buying market is fragmented among hundreds of smaller players worldwide. The model has little barriers to entry and has gained attention from shoppers and businesses alike globally...[11] According to SmartMoney, by August 2010, there were more than 500 group-buying sites worldwide, including local sites that cater only to a single city in some instances.[12]
Tuangou, which translates as team buying or group buying (also known as store mobbing), is a recently developed shopping strategy originating in the People's Republic of China. Several people - sometimes friends, but possibly strangers connected over the internet - agreed to approach a vendor of a specific product in order to collectively bargain (haggle) with the proprietor as a group in order to get discounts. The entire group agreed to purchase the same item. The shoppers benefitted by paying less, and the business benefitted by selling multiple items at once.
The tuÃngÃu phenomenon has been most successful in mainland China, where buyers have leveraged the power of group buying, which has led to English language media, such as msn.com, profiling the tuÃngÃu buying process. The popularity of the strategy in China is often attributed to the Chinese tradition of bargaining for the purchase of goods of all types. TuÃngÃu buying also ameliorates a traditional distrust of goods purchased from unknown sellers as individual members of the buying group can vouch for a particular seller's quality to the rest of the group.[13]
Two of the most powerful engines behind this trend are online daily deals and digital coupons. Hundreds, perhaps thousands, of websites and apps exist solely to connect bargain-hunting shoppers with such opportunities to save.
The content on Money Crashers is for informational and educational purposes only and should not be construed as professional financial advice. Should you need such advice, consult a licensed financial or tax advisor. References to products, offers, and rates from third party sites often change. While we do our best to keep these updated, numbers stated on this site may differ from actual numbers. We may have financial relationships with some of the companies mentioned on this website. Among other things, we may receive free products, services, and/or monetary compensation in exchange for featured placement of sponsored products or services. We strive to write accurate and genuine reviews and articles, and all views and opinions expressed are solely those of the authors.
1. Groupon
This mega-site negotiates huge deals, typically between 50 and 90 percent off. We love the variety of offerings the site presents, like discounts on spa treatments, hotel rooms, restaurants and fashion. As with all the group buying sites, make sure to read the fine print as some deals have restrictions. Another plus: the site is super easy to navigate.
3. KGB Deals
KGB Deals is a site which offers daily coupons on 50-90% off of things to do, eat, wear and enjoy in your city, and the deals last for a week (as opposed to 24 hours, like some of the other sites). So take your time, see how many friends you can get to join you, and pick and choose between the best of the best in deals.
Those are all great sites that you recommended. Another great site is It has all the deals from Groupon, LivingSocial, WagJag, Dealfind and many more. You can browse deals based on category and location.
In many cases, a group buying site will be the first time these customers have heard of your business. The attractiveness of your offer reflects the value and discount as well as their perception of your business.
One example is collective buying of household solar power. There are many local schemes in places including the UK and US to enable households to get solar panels installed by organising local households to come together as a group to approach installers. It makes it worthwhile for installers to provide this service if there are enough buyers in a relatively small area and more cost-effective for both parties.
One procurement group in the UK found that its members were particularly demanding of its services during 2020 as their buying needs changed rapidly. It attributes some of the 20% increase in buying from its members to restaurants suddenly requiring take away packaging, as well as a high volume of demand for personal protective equipment (PPE) to meet new hygiene standards in the Covid-19 pandemic.
For newer businesses struggling to set up a supply chain and get taken seriously by suppliers, joining a group may help them gain credibility as a buyer. Some businesses also find the group buying approach less time-consuming as there are fewer suppliers to have to deal with, fewer invoices to manage, and sometimes requires less time spent searching for deals and negotiating with suppliers.
If the same business organises itself into a group with other small businesses, the vendor may find it cost-effective to serve them. Even better, the group mediators may take on some of the work associated with fulfilling the order, such as by distributing goods among members.
Depending on how the group organises itself, selling this way may be an effective way to reach a new audience. This is often because the vendor is reaching businesses that are usually too small to make them a profitable customer. This has the advantage of helping the vendor cover parts of the market that would otherwise be reached by competitors, and gain market share.
It makes it easy to reach the right consumer at the right time. For vendors trying to reach businesses, it can be a helpful way to reach the right people in that business as the ones responsible for the buying decisions tend to be the ones in the buying group.
You might also see a high volume of returns that need processing at the same time. Make sure you have the infrastructure in place to handle all this within the timescales vendors expect. Fulfilling big deals from group buying sites can really test your resources, particularly for things such as response and delivery times.
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