Group Buying Experiences: How large is large?

“If I have not seen as far as others, it is because giants were standing on my shoulders.”  Hal Abelson

In the past several years, digital giants have grown up in the in the land of group buying services.

The precedent for these efforts existed in buying clubs, groups, co-ops, etc, but the advent of current technology brought forth the ability to leverage this concept to the highest possible level.  While it is the current economic climate with its propensity to promotionalism has acted as a stimulus to growth, there is no doubt that group buying is a concept whose time has come. Groupon and SocialLiving today own 90% of this market as currently configured, but as their success in a very brief period of time has shown is that there is no telling directionally where this phenomena is headed.

The fact that Google recently offered $6 BILLION to buy Groupon, and that they were turned down is a testament to where industry heavyweights believe this market is headed (I think they jury is still out on whether Groupon specifically made a mistake on estimating their future is a subject for another time…). The fact that Facebook and Google are now entering this market on their own, along with platforms involving banks or bank partners, will make this a very lively space over the next several years. The banking approaches (typically with partners) are particularly interesting because of the localized consumer spending data that they have available to them

Consumers love this approach; the real issue is making this a win for participating merchants. The question of brand building comes into play: most merchants using these services are small and many do not have the sophistication to capture and use the possible data available. Most are looking at these group offers for a short term fix to a revenue shortfall. But is this a long term win? Likely not.

In response, software for creating a buying group off of their own web site traffic (especially ShopIgniter, a cloud based application) is becoming more readily accessible to these small businesses. And while these apps provide the engine, they can also provide information through partnering with an analytics provider that enable these smaller merchant customers with the data necessary to capitalize on these promotional events  and create longer term, full margin business.

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One Response to “Group Buying Experiences: How large is large?”

  1. rodale Says:

    Hi Mark,

    Here comes the latest group buying program… with a twist. Not only do you save the standard 50% or more on products and services, you also get paid 5% of sales down 5 levels of people you refer to the program.

    Check out the videos on the corporate page at http://rodale.TheCustomerAdvantage.com, and follow my blog at http://DealAlert.wordpress.com as I post all the deals and give away the insider secrets.

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