Thoughts on group buying sites

Congratulations to Khailee for getting GroupsMore sold to Groupon (in a record five months since its inception!). He tells me they’re now Groupon Malaysia and Joel (his partner, co-founder of YouthSays) is going to be CEO of Groupon Malaysia. A lot of people instantly said that since Groupon is now in Malaysia, all the other deal sites can go the way of the dodo.

I don’t think so. For a site that does group purchases to be successful, people need to know it exists. Savvy Malaysians have always been into group purchases because a) our currency generally sucks, b) its difficult to get cool stuff shipped to Malaysia. Of course the currency is improving now, and there are virtual postboxes that ship stuff to Malaysia for a small fee.

But I digress. Group purchasing has been happening for years, heck over a decade. I remember when PDAs (Personal Digital Assistant’s, in case you’ve forgotten) were starting to become cool, there were many forums for PDA owners to hang out at. PDAs require accessories and since it was not mainstream yet, the best place to buy accessories was on the forums with other forum members. Someone would collect the money and negotiate to get a deal done to bring in the items for cheap. Most of these forums probably don’t exist any longer, but the LowYat.Net forums are still kicking. I’ve seen this applied to other niches like photography as well; and I’m probably missing out a whole bunch of other industries where people gather together on a forum and choose to grab something at a better value.

This is why I’ve generally not been too excited by group buying sites. I see it as an old idea being rehashed, except this time the target is the masses. For a group buying site to be successful, I think a few rules hold true:

  1. you need to successfully get the word out to buyers
  2. you need excellent (convincing) copywriting
  3. you need to find good deals that your audience will want to purchase

Am I missing some rules?

Now to address some of the rules. How do you gain critical mass and get the word out to buyers? I focus on buyers because you may have a community, but if your community is only focused on making money rather than spending money, you’re not reaching the right audience. Depending on your target market, you will have to look at ads in the newspapers, radio, television, Google Ads, Facebook ads, and so on.

Malaysia is a melting pot. People generally don’t speak the same language, though English and Bahasa Malaysia are widely spoken. Copywriting needs to be spot on. If you target only the English-speaking audience, it will affect where you target buyers and it also affects the deals the audience are after. No point having great copy (in English), putting up ads in The Edge Daily, and having deals on products from Zaitun, right?

Audience, target and language all play a role for a successful general group buying site. We have to celebrate our diversity. In other words, there’s market for plenty of group buying sites. Do you think forum group buying will disappear? I don’t.

If you happen to run a group buying site, think of your niche and pivot. Why for example, have we not seen people focused on getting good daily (or weekly like GroupsMore does) deals on fashion items? Would a site that said “first 50 people to buy this model Coach handbag gets it at RM1,800 and the deal takes place, and if the number breaches 51, the bag becomes a mere RM1,500 for everyone” be successful? I think it will, if you’ve got the correct target market (people that buy luxury goods very rarely want to pay full price for them — if you’ve worked for your money, you’ll want to save ever penny).

We’ve just seen that in the UK, Facebook has launched Deals. From a cursory inspection, this looks like a cross between Foursquare and Groupon, i.e. it finally makes using a location based service useful. Not that its impossible to do with Foursquare — they sell custom badges to corporations. What I think Facebook will do is decentralise it, just like they currently have done with their ads — let anyone run one. Google Offers will work for anyone that has a Places page — you create a Places page (helping make a better location database, quite unlike Foursquare’s) and you give an offer to people (no check-in’s required). Very decentralised.

Tie group buying dynamics with social shopping aspects, provide useful bargains, and you may just have a very profitable business, that also helps spur the economy!

Related posts:

  1. Advice from David Ogilvy about group buying
  2. A Groupon before you close?
  3. Telegraph partnering with online sites
  4. FriendFeed room, identi.ca group, for MySQL
  5. Thoughts on Foursquare

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