Group buying is ready for mobile and social networking

Ever tried bargaining for something by promising the shopkeeper you’ll buy more if you get the right price? We all do it. And the discount we get by doing that is usually 2-5 percent, 10 at the most. Now if you get your friends also in the picture, that percentage notches up slightly more. What if you brought in the promise of 10 or more buyers? The shopkeeper becomes more pliant and the discount goes up to 15-20 percent.

This is the concept behind group buying—a concept that saw a big surge in India last year. Several group buying portals sprung up, offering unbelievable deals on everything, from gadgets to designer-wear, restaurants to spas, cruises to movies, and more. The way it works is that the portal ties up with the retailer and promises to pull in a certain minimum number of buyers for a particular product or service. If the minimum number is achieved, the deal kicks in. If not, it doesn’t.

Globally, group buying has been around for the last few years, with players like Groupon and Living Social growing meteorically. It took some time for the model to be evolved and its chinks to be ironed out in the US and Europe. The Indian players, consequently, have it a little easier, since they’ve recently entered the fray.

The biggest factor in making group buying successful is that it makes these deals available where you are. The idea is that if you are getting a discount for a spa treatment, you would want the spa to be close to where you are. And this is where group buying on mobile can help. Combine group buying with location based services and you have a killer model. Imagine you are in another part of town and your mobile tells you there is a group deal in the works for a restaurant there.

The other important factor is getting the number of people signed up to make the deal you want active. And social networks have started to play a big role here. Share a deal on your personal network, get your friends to join the fray, and the deal is yours. The more the number of people following you or networked, the better the chances of your deal. And since the social networks are available on mobile and are adding location mapping to their list of features, you get location, mobile, social numbers, all at once. At least that’s how it should work theoretically. But it needs to be tested out more intensively in practice. And the Indian group buying sites could take advantage of the high mobile penetration as well as social networking numbers.

The market awaits, are you ready?

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