It seems despite the economic disaster from which the world is struggling to recover there is constantly a plethora of new products and services wriggling their way into the North American market – there are more things to buy, but less money to buy them with. Product developers essentially need to contend for the consumers’ money to get by. So how can today’s merchants compete for exposure without breaking the bank? Apparently, with group-buying – an online trend that is rapidly growing in popularity – this is entirely possible.
Group-buying is a concept originally introduced in China with a site called Tuangou and has popped up in the North American online marketplace this year. With highly successful copycats such as TeamBuy.ca, Groupon.com, and Wagjag.com - to name a few - as well as several other smaller franchises, the concept is spreading like wildfire. How does it work? These dealers are fuelled by a group of up-and-coming companies offering a daily new product bargain at steep discounts in exchange for the site’s promise to rake in plenty of customers – the catch is, you only get the deal if a minimum number of people sign up for it by the end of the day. This leaves the consumers working together and providing cheap, word-of-mouth advertisement. Suddenly a new and unknown brand becomes a little familiar.
Timer and Deal Tracker on Teambuy.ca, similar to those used on group-buying sites.
Aptly nick-named social commerce, group-buying has been racking up the brownie points in Canada through putting itself out on Facebook, Twitter and the like, taking full advantage of the relationships deeply entrenched within these social networks. It’s brilliant, really. Most offers are presented anywhere from 50-90% off – so cheap, it no longer matters that the company offering it is virtually unheard of; and given the current economic climate, treats such as fancy dinners and spa packages are a luxury – one can’t help but spread the word by posting it on their News Feed or sending a little Tweet in hopes that their friends, and friends-of-friends, and maybe even complete strangers catch on and sign up for the deal to make it a ‘go’. It sounds remarkably simple - and borderline viral - but it works.
Groupon.com’s list of daily deals. Group-buying sites often promote a large daily deal, with several smaller ones in the hopes of multiple purchases.
The interesting thing about group-buying is how similarly to traditional online ads it is presented to consumers, yet its virility gives it an extra push. Facebook displays ads along the side panels of its web page and I’m exposed to at least 3 new ones every time I refresh the page. Yet one might share my sentiment in that during the 6 years I’ve been subscribing to Facebook, I can’t ever recall clicking on one of those ads. Why? Well, how do I know that there is any truth to the deal? It may well be a waste of valuable time (it’s depressing for the producer, considering what I imagine the price of ad-space on Facebook, Twitter, Linked-in and such to be). However, since first being introduced to the concept of group-buying a few months ago, I frequently sign-on to Facebook and notice a posting by friends about some kind of great deal for bedding, jewellery, even cheeseburgers; sometimes, I go so far as to check the website out.
This is where the group-buying model gets it right: they provide a vehicle for relatively small firms with low advertising budgets to acquire highly coveted ad-space on social networking sites without the social networking price. And since this allows the offers to be presented to consumers through their friends rather than by the retailer, the predisposed level of trust leads to an automatic subconscious absorption of the information, rather than unnoticed exposure - if my friend likes it, it must be good, right? Many group-buying sites boast thousands – Groupon.com brags about millions – of dollars worth of savings, allowing them to creep up from “fad” to investment-worthy.
A typical Facebook posting from a group-buying website.
Group-buying is still in its early-stages but has proven to be a medium of advertising worth considering and capitalizing upon. For companies looking for a bigger bang for their buck, this will grow to be a hot commodity as social commerce sites become more prevalent. As Mashable’s Pete Cashmore says, ‘it’s a good idea’, and the success stories speak for themselves.
Melissa Itwar
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