group buying. isn’t it fun!. it’s a revolution where did group buying come from? “group...
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Group buying. Isn’t it fun!
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It’s a revolution
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WHERE DID GROUP BUYING COME FROM?
“group buying” or “store mobbing,” tuangou is a shopping method that originated in China. People would swarm a store all at once and haggle for a group discount on a particular item. But people quickly realized that it was a lot less painful to contact other potential buyers and organize massive group buys online.
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Let's go! (your last picture for a while)
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THE OLD MODEL
• Start a group dedicated to a specific product and set a target price.Alert your network and encourage them to add in to your group. The more people join, the lower the final price.The group closes and vendors bid on the sale; lowest bid wins. The group is happy because they’ve just got a substantial discount, and the vendor just sold a lot of product
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WHY DID IT FAIL IN THE 90s?
Sites like Mercata and Mobshop in the 90’s failed because:
• Buying groups could take days or weeks to form
• No social networks so no word of mouth
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THIS TIME IT WORKS
• Social networks have made people used to joining groups quickly
• Texting, Facebook and Twitter means deals spread fast
• Groups fill faster creating larger discounts, incentivising buyers
• Offers for specific products
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BENEFITS
• Big discounts• Discovery of unknown new services• Often get ‘side deals’ in addition to main deal• Deal personalization potential• Targeted by location (e.g. postcode)
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WHO IS BUYING?
• Tend to be affluent with disposable income
• 18 to late 30s
• Likely Facebook and Twitter users
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ECONOMICS
• Merchant retains minimum 50% of the deal
• High offer redemption rate, about 80%
• High spending
• Repeat customers (around 20%)
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BEST FOR…
• High fixed cost businesses
• Business with high customer acquisition cost, normally have to advertise A LOT
• Business thriving on repeat customers. e.g. spas, lifestyle, restaurants
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TOP CATEGORIES
City tours, Hair Removal, Spa days, Facials, Massage, Yoga, Manicures, Seafood, Pizza/Fast food, Hair Salon
FOLLOWED by Restaurants, Fitness, Life Skill classes, Food and grocery, Sporting events, Beer, Dance classes, Home services, Bars and Clubs, Treats, Wine tasting, Womens clothing, Theater
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(So probably more men than women, then)
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4. How To Build distribution
Email sign ups via: Refer a friend, Twitter, Adwords PPC, PR, affiliate schemes, Facebook fan pages (built by Facebook PPC) and loss leader deals.
• And a large customer acquisition budget.
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AND FINALLY
We will gradually see more and more local businesses using group platforms for filling excess inventory, smaller deals, self service format (e.g. small local hairdresser wants to fill 5 chairs)
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Man the barricades!
Here come the group buyers!