Group buying or community group buying (CGB) model is referred to as another form of e-commerce where the minimum number of consumers buy goods and services at reduced prices. Also known as collective buying, the concept of group buying works like cooperatives, where a large number of people buy from a merchant.
Group buying is a popular trend in China, which has one of the highest e-commerce uses in the world. Large players such as Pinduoduo, Meituan, and Didi are competing with each other to tap this market.
This e-commerce model utilises the power of buying in bulk so that both the consumer and the vendor benefits from the transaction.
The group-buying site, after negotiating directly with merchants, selects and advertises an offer for a day to its subscribers — typically a hotel stay, a restaurant booking, an excursion or a 'spa day' at an attractive, one-off price. The deal is only available for a short time, often just one day.
Consumers can avail discounted prices on their purchases while merchants reduce last-mile delivery costs and sell products in a single transaction. A particular feature of the group buying concept is the value it offers to local advertisers and businesses.
Group-buying operations, typically, expand city by city. This is because deals have to be local. Businesses from spas, restaurants and adventure getaways act as the main source of such offers.
DealShare is known for pioneering the CGB model in India. It also allows a coalition of people, often living in one residential block, to obtain discounts by purchasing groceries and other daily essentials in bulk. The practice is usually organised by a community leader such as a local administrator or even a convenience store owner.
Group buying sites let their members know about a deal that is on offer by sending emails or even text messages on their mobile phones (if the number is shared). Usually, group buying sites have deals in different parts of a city and try to cover local brands and eateries.
Social networking is one of the biggest platforms for communication and group buying sites take advantage of this effectively.
