Group Buy Savage Growth

Groupon was dubbed the craziest Internet company by the New York Times, as the world's largest microblogging Twitter valued 1 billion dollars for three years, with Facebook, the biggest social-networking site, for two years, while Groupon valued 1.35 billion dollars for only 1 years and 4 months.

In early 2010 Groupon financed 135 million dollars from Russian digital sky technology and Battery ventures. Through Cross-border mergers and acquisitions Groupon has been growing rapidly over the past 6 months, the number of registered users is expected to reach 25 million by the end of this year, the total sales will reach 400 million U.S. dollars, which is a very alarming number.

In the domestic since the United States Group online line, China group buying sites everywhere, within a few months, by "Hundred Regiment War" rapidly upgraded to "thousand-Regiment War." American group NET, handle NET, glutinous rice net, full, a group of a number of sites announced to win the investment support, Shanxi Coal boss to invest in the mode of the site such information is filled with the industry's audio-visual, or large or small sites, traditional businesses are involved in group buying, can be said that the current domestic group buying is in the barbaric growth period. And the leading country Japan Piku and Opod get venture capital, the whole world is scraping a "group buying Wind". For group buying mode, think not only its hot, but also should include: Buy the core value is what? What problems does group buying help people solve? What customer needs do you meet or create? What are the risks involved in group buying behavior?

The rise of group buying is a steady flow of cash

Group buying mode is involved in the power of three parties: businesses, group buying sites and consumers. Group buying site to find cooperative businesses, selected group purchase products, in the determination of the rules after the launch of group buying, through controllable propaganda channels to aggregate consumers, consumers pay the implementation of the purchase after payment, group purchase site will be charged to the merchant, at the same time according to the agreed ratio of the Commission. This is the way the whole group buys and runs logic, and the most attractive part of this logic is the flow of cash.

Stable and manageable cash flow is the most important reason for the rise of group buying sites, in Groupon's case, Groupon is unusually high, and most of it will take a commission of up to $30~50%, why would a merchant accept Groupon for such a high Commission? First of all, Groupon is very strong, second, the business is not at risk, businesses based on the actual operating costs of participating in the purchase of the product prices, in order to ensure the profit of the case to provide a high commission; In addition, because of such a large commission, Groupon is very likely to silently dial the 5%~10% To help each product advertise elsewhere, and businesses to ensure profits, of course, is willing to follow Groupon, in fact, according to the Groupon website, there are up to 95% of customers are willing to work with Groupon next time a product. Group buying site is in this cash flow through the accumulation of different levels of consumer groups, building community reviews to enhance the value of Word-of-mouth, access to platform advertising costs + commodity profits.

Related to this is the merchant, the businessman uses the mature buys the network powerful media conformity resources, the systematic promotion, saves the promotion expense, obtains the experience user data, displays the good product service, obtains the repeat business opportunity, by the way produces the income, the excavation sells again, obtains the sustained stable income, In particular, through the promotion of group buying can effectively solve the short period of low consumption of the problem.

Group purchase similar to the effect of paid ads

From the operation logic of group buying can be clearly seen, group purchase itself is similar to the effect of paying advertising mode, contains the advertising logic according to CPS assessment. Group buying sites and businesses exist between the first collection of money, pay by effect of the Logos mode, this model for any vendor has a great appeal, because it makes advertising more rational and more intensive, in line with the normal needs of commercial development. On the other hand, it is this operating logic that determines the cost of the group buying site is very low, almost no threshold.

In the entire group buying behavior logic sticky user is not the group buying behavior itself, nor group buying site, but discount merchandise. The quality of goods, discount strength determines the enthusiasm of consumers to participate. Group buying is usually targeted at small businesses or service providers, which are generally unable to pay large advertising fees, nor have they found an online advertising platform to display themselves. Restaurants, fitness, consumer goods and other small businesses are trying to attract new customers. Group buying offers just such a platform. Because it is paid in advance, businesses and group buying sites can immediately make an assessment, share the benefits, such a large discount transaction by day, only the buyer reached a certain number to take effect. This satisfies the dream of many businesses, and does not need to pay advertising fees to still attract new users to enter. This model also poses a threat to newspaper advertising, in which the most influential is classified advertising. For years, newspaper industry analysts have argued that advertising spending is flowing from newspapers to direct marketing channels, most notably digital media, which is now flowing to group buying sites.

The market has proved that this model is not bad, space is very big! It is also facing more homogenization competition, although Groupon is growing rapidly, but competition in the field is heating up: The US's second group buying site, LivingSocial, won multiple rounds of investment earlier this year. Since Groupon became a dark horse, many rivals have sprung up in many cities. At the same time, the site Yelp also announced the launch of a similar Groupon service in Santiago, offering local deals to provide users with products and services. Similarly, in the domestic with 58 with the city, Thousand Oak, Taobao, Tencent, Sina and other giants of the intervention, competition to the current stage, has not only the product itself, the competition evolved into a resource war! A competitive victory will be achieved by getting more favorable products and gathering more users ' websites. Small single group purchase site is difficult to big, in less than half a year may enter the knockout stage! This is determined by the ceiling of the group purchase itself. Once some of the group purchase site's operating model has broken through, it is likely that large-scale group buying sites have been merged and closed down the phenomenon, and the breakthrough of the group purchase site, its new operating model is recognized by the market with sustainable development capacity, it may be developed, and form an independent industry, thus into the capital circulation market.

Group buying also has many problems

As with any emerging consumption style, group buying is also facing problems, the main problem of online group buying three aspects: the proliferation of traffic and long time to buy between the contradictions, integrity transactions, platform vulnerabilities.

The first is the proliferation of traffic processing: one of the main features of group buying mode is very concentrated, if a day of group buying activities are very attractive, then focus on this day network clicks will be greatly increased. And the surge of source station traffic will bring a series of web site problems, such as Web page response speed slow, or even broken network or server interruption. Amazon once had a statistic, home opening time every 100 milliseconds, the site sales will be reduced by 0.1%; Meanwhile, the results from Jupiter Research show that 77% of network users will be less likely to visit the site if the site service is interrupted. The surge in traffic will also bring a lot of customer service issues, group purchase as a consumer services, if not timely provision of strong customer service, the actual operating effect will be a great impact. If the time is long to buy, you must sacrifice timeliness, users are vulnerable to external factors of interference from group buying.

The second is the protection of the integrity of the transaction: now the group buying site has no relevant rules to restrain it, therefore, fraud cases are not uncommon. After all, online group buying is a loose group that is temporarily organized for a specific purpose. In reality, the group buys a successful transaction after the spread, after the sale of disputes, often difficult to organize, which gives consumers the future of the rights of action to bring difficulties. There are some pitfalls in online group buying. A lot of industry's product price lacks transparency, some merchant secretly pulls high price to discount, such consumer is very passive. Some online group buying is hidden in the back of the merchant launched, such a group purchase is actually promotion. In particular, group buying site in order to pursue a strong discount, often lack of business necessary textual research, but also willing to accept the cooperation of small business organizations, which contains a large number of funds, products, service risks. Since consumers are directly associated with group buying sites, these risks will actually be borne by group buying sites in the future.

Furthermore, the technical risk of the platform: each region has its own specific products and target consumer groups, from this point of view, the market can be set up to buy a lot of organizations, many group buying organization loose and very small, this type of group buy lack of sufficient technical support, It is easy to have data loss in the process of group buying (Shenlu Administration/text).