Deals, discounts: Local shoppers warm up to group buying concept

MANILA, Philippines - The big buzz words in the digital space now all draw from the power of the crowd. How many likes does a Facebook status need to be considered popular? How many retweets does a lone tweet get before it gets viral? How many stars does a book or movie need in user reviews before it gets the attention of another potential reader or audience?

There is always strength in numbers and more so now that online metrics and analytics can accurately keep track of people’s digital footprint on the Web.

But what if we can use the power of the crowd to drive prices down? That in essence is the concept behind group buying, first popularized in the United States and now getting some following locally.

In the group buying paradigm, a merchant usually drives down prices by as much as 50 percent if he knows that a significant number of customers will purchase the product or service. An eat-all-you-can dinner buffet, for example, would sell for only P500 instead of the regular price of P1,000++ per person if the restaurant knows that there would be at least a hundred people who would sign up for the promo.

At the center of this equation is the dealmaker, usually a website that sells various types of deals for people to sign up. The deal is on if the required number of customers signed up for the promo. 

Spreading the word

Groupon and Living Social, two of the most successful group buying sites in the US, have gained enough adherents so as to spread the word and the concept in other parts of the world, the Philippines included.

As of this writing, the current deal being peddled by one of the first group buying sites to set up shop in the country, buyanihan.com, is a complete relaxation package at Aesthetic Science (one-hour body scrub + bleach + one-hour body massage) for only P560, or 60 percent off the regular price of P1,400.

Five days before the expiration of the promo, 178 had bought the deal, way above the 20 customers required by the merchant for the deal to push through.

Earlier, buyanihan.com also sold deals such as 50 percent off on food and drinks at New Bombay restaurant, one-year unlimited entry at Zoomanity Theme Parks for only P495, and 50 percent off on Blue Water Day Spa Fun Run tickets.

With the Christmas season just around the bend, its current deals are focused on gifts and giveaways. It is offering P1,000 off on Bloco toys, 50 percent off on Kamasutra cakes, and even 50 percent off on tickets to Repertory Philippines’ “Little Women.”

Mass appeal

While the group buying concept as a twist and extension to the more familiar online shopping concept still has to attract mass appeal, Eddie Lee, chief information officer of Platform2u.com, the company that runs buyanihan.com, is optimistic that the idea would fly.

“Based on the number of customers we have — every month there is an increase — I think the market is ready. It is also perfect timing because Christmas is coming and people are looking for deals and discounts,” Lee said.

An obvious play of the word “buy” and “bayanihan,” the age-old Filipino practice of helping each other out, buyanihan.com also hopes to get Filipinos to buy together and create value, Lee added.

To purchase a deal, one needs to register in the buyanihan.com website, pay for the deal using credit card, PayPal, GCash or deposit the money in a dedicated bank account. Then the customer gets a coupon, in the same way you get an airline ticket when you purchase online. You print that coupon and present that to the establishment upon availing yourself of the offer.

So far, Lee said the customers who bought deals from buyanihan.com did not have problems redeeming the value of the deal. “We also provide customer support via e-mail, SMS, voice calls or chats to help new customers get familiar with the concept behind group buying, even as far as giving directions to the place or establishment or helping them with related concerns,” he said.

Value for customer

The value for the customer is quite obvious. One gets a generous discount on goods or services that one would avail himself of anyway. But what is in it for merchants or vendors? Aside from offering a product or service for half of the regular price, they pay commission to the group buying site that promoted the deal in the first place.

“When we make a deal with merchants, we also want them to win and a lot of times they win,” Lee said.

“When the customers go in there they can continue to upsell them with other things. What we are saying is don’t look at the immediate profit. Take it as a marketing tool to get the customer in. So far, our merchants agree on this, when the customers are there, they buy, if they are satisfied they recommend the place to other customers or become repeat customers,” he said.

“We also help them with digital marketing — set up a Facebook presence for them or help them managing their e-mail database. They get all those exposure, plus of course the fact that we give them customers,” Lee added.

Aware of the fact that the idea has to be introduced more to the general public, buyanihan.com is also taking their campaigns offline such as joining payday bazaars, flea markets and tiangges this season, and going the rounds of corporate offices and BPOs to sell deals and introduce the idea.

In the meantime, other group buying sites have set up shop locally and buyanihan.com sees it as healthy competition and positive development that would help popularize the concept locally.

Meanwhile, the online rumor mill is abuzz with news that search giant Google is eyeing Groupon for a $2-billion to $3-billion buyout, while online retailer Amazon was reported to be in talks with Living Social for a $100-million investment.

Among other things, this may be proof that group buying is here to stay and has a lot of potential in our online shopping future.