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Published on July 7th, 2010 | by Saurabh Pandey

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Group Buying! Game Changer or Not?

So how do you buy your t-shirts, or shoes?

Well,  you saw someone wearing a nice converse shoe, and you end up asking him -where did he get one from. Then you take your best friend and try out the shoes in the store- why did you take your best friend? Oh, because you wanted to get feedback from him on whether the shoes look nice on you or not. And maybe if you were buying an unbranded shoe or a t-shirt from janpath, you might want to take help from your friend in bargaining the prices won’t you?

So, right from getting inspired to getting the location of product availability to feedback and then finally buying; shopping is social even in the offline world!

And that brings us to a couple of questions everyone is asking today- Is Group Buying going to be the next big thing? Or Is Group buying = social shopping?

My answer is -that’s not the right question to ask! Reason?- It’s too early to say anything and is too niche a concept to really take on ecommerce or social commerce.

Let me explain- Group buying as we see today focuses on only one aspect of buying and that’s price or discounts!

Group buying sites like mydala, snapdeal and dealsforyou in India focus on ‘deals’.

And precisely why it’s not the game changing idea.

Let’s take an analogy- in an offline world if you want a deal where would you go? Maybe Janpath or Sarojini Nagar!

And if you want branded and latest stuff where would you go? Maybe to South Extension!

So, there is a need for a deals’ site and there is also a need for regular ecommerce site.

I think there is a clear path for social shopping-which is not just about group buying but about incorporating all the social elements of buying and I think more than group buying it’s the social shopping that will be rather interesting to watch.

Coming back to Group Buying Sites:
Group buying sites today are of largely 2 types:

1. Hyperlocal services based– salon, pizza, spa, restaurant etc.These are city specific services or products which you anyways buy. India, somehow, mostly has group buying sites in this category. ( snapdeal and dealsandyou do)

2. Gadgets– impulsive and good deals. These are not area specific, but things like Netbooks, LCDs, Storage devices, vaccum cleaners those that you will buy if a great deal is offered. (Stuff that woot does).

A 3rd category that I think should shortly make a headway will be where niche products can be sold as deals. They could be fashion items, ethnic items, cruise, even land or apartments. Not sure if any player is already into this. Imagine if a site offers a Car at a deal! I am sure this deal will be a hit in delhi at least!

What are the challenges for group buying sites?

1.Scale- being hyperlocal, one has a challenge of scale. How many hyperlocal areas to be covered? How soon? What kind of infrastructure would be needed to service clients in hundreds of local/hyperlocal areas? The smaller a hyperlocal area the lesser are the chances of getting a deal (it will not be profitable for a vendor in a very small city) hence what is the optimum size for servicing a area?

These are few of the questions that need to be answered while scaling up.

2. Traffic– group buying sites need huge traffic. Because they need multiple numbers of ‘one’ product to be sold. Since group buying depends on free traffic or the social network of buyers-they face a challenge of manipulating or leveraging this traffic fully.

3. How do you sustain excitement-How long can you sell deals on spas in , say, lucknow and keep sustaning interest levels. The challenge will be to innovate in terms of new products and services.

So, today there is no trend in terms of which type of Group Buying site will prosper in future- hyperlocal or Gadgets! Or will the 3rd category that of niche products. It’s too early in the day to make predictions. With Amazon buying woot.com (and a similar frenzy in India too) this space is becoming exciting. So keep observing and do add on here if you have any thoughts-I will be glad to publish the same.

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