The latest phenomenon to grip the Internet is ‘Group Buying’. Though the concept of group buying has existed for a long time, it has just found a new platform- the Internet. And there are new ideas being floated (e.g. BargainCrowd.com).
Group buying works on the basic concept that ‘mass production/sale reduces costs and ultimately the price’. If you get a group of people to buy the same product you are buying, you will be able to help the merchant give it to you at a very competitive price.
Group buying works like co-operatives where a large number of people buy from a merchant. The merchant is able to reduce production costs, marketing costs, and sales costs when people buy in bulk. This means a bigger margin for the merchant and the merchant can thus afford to offer larger discounts to you.
For example, you buy a cake and it costs you $10. It costs the baker $3 dollars for basic ingredients, and another $3 dollars are other expenses attached to it like staff employed, electricity, rent and the like. The baker makes a $4 profit on the cake. If you get 50 people to buy the same cake, the basic cost of the cake and the overheads together will come to about $4 dollars. The baker can sell you this cake for $6 and make a $100 dollar profit from the entire sales. It’s a win-win situation as you have the cake at a 40% discount and the baker has made a handsome profit in the bargain.
Not only will the merchant/manufacturer get a considerable amount of profit on these buys, they will get the customers they always wanted. If the merchants or manufacturers impress them well enough, they can convert these one off customers into loyal clientele.
The Internet has proven to be a great platform for group buying. There are a couple of reasons for this:
It is easily and readily accessible to everyone. Be it home, office or even while traveling, you have Internet access everywhere.
All group-buying sites let their members know about the deal that is on offer by sending emails and texts on their cell phones. You thus don’t have to run to find a deal, it finds you.
These sites have deals in different parts of the city and country and try to cover every little place possible. This way they ensure that you find a deal in a place close to you.
The Internet offers audience like no other. You can get to your target audience very easily as you can have very specific deals and campaigns to interest them.
Social networking has become one of the biggest platforms of communication and group-buying sites have taken advantage of this effectively. You can share a deal on social networking platforms and you get rewards if your friends buy those deals.
The Internet has become the ultimate place for group buying and with people using their credit cards liberally online it helps merchants get customers and customers get great deals.
John Tran has done pioneering work in the concept of group buying. His contribution in this way of doing business has helped many businesses and consumers. When we talk of group buying, the top names that come to mind are BargainCrowd, Groupon and LivingSocial.
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