Wenli Liao
Jun 29, 2011

Five things you need to know about group buying in China

Dataotuan analyses data from group buying deals aggregated in the Chinese market, following around 150 sites in over 300 cities in China and analysing around 3000 deals every day. Wenli Liao, CEO of Dataotuan.com shares her insights on this hot market.

Wenli Liao, CEO of Dataotuan.com
Wenli Liao, CEO of Dataotuan.com

1. Think 'quality' first, and 'discount' afterwards

Popular group buying deals attract buyers because of the deal quality, not just the bare discount in percentage or absolute numbers. It would be a mistake to think Chinese netizens are willing to buy anything, just because it has a rock-bottom price.

The web is the place where they can compare offers and ask friends about their experiences. What you get for a reduced price at whatever daily deal site not only has to have a perceived value in the buyer’s eye,  but if possible, a proven value. But how do you define quality? It seems to be closely related to the reputation of the seller, the flexibility he offers the buyer, and also the 'daily deal site' the seller chooses to use.

2. It is better to be perceived as a trusted party. If not trusted already, work on it

The perceived value can be a trustworthy merchant; a shop you heard already about and of which you remember or find instantly positive recommendations is more attractive than an first-time unknown seller. If you buy bad quality from an unknown seller it’s money lost. Even if it’s not a lot of money. Shops should add recommendations to their offers.  And ask loyal clients to help them spread the reputation.

Next to the power of the brand, easiness to consume your purchase is also a helpful driver for a popular deal. The more a shop defines the usage terms in a very flexible way, the more attractive a deal can be. That’s one of the reasons why movie deals are popular deals.

3. Consumers want to go to one of many possible outlets. Better to be everywhere

When Netizens can use the discount coupon at many places (for example, a chain of restaurants or massage salons), you have more chances to attract buyers than when you only have one location.

4. Not only let your future clients choose the place, but also the time they want to come

You will increase the number of buyers if you are less strict in the small print. Make it convenient for your customer to redeem that hair cut or the dinner deal at a time which is the most convenient to them. Spread the total redemption time over a longer period and not just on weekdays between 5pm and 7pm.

5. The big 'daily deal' sites seem to be more attractive

Right now, most of the popular group-buy deals can be traced back to the big 'daily deal' sites. Could it be that they have already acquired a trusted top position in the mind of the consumer, overwhelmed by the huge amount of advertising they spent already, or were our very first observations a prelude of something more important? The future will tell.





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