Group Buying 101for Small Business

People who have heard of the term "bandwagon mentality" know more or less what this new trend Group Buying means. It is an understandable rational reaction showing extreme interest for anything that fancies the majority. People feel that if there are droves of people who are willing to purchase a product or service, well then, it must be good.

There is a comfort in numbers. It feels good to go with the flow - whether it be good or bad. You experience something together, feel satisfaction with a good number of people, or, if ever some item turns out to be unsatisfactory, at least you experienced disappointment together with a good number of other "victims".

What makes group buying so popular? It could be the basic human need to be social beings. In each individual is an inherent need to be accepted by his fellows. It feels great to be in on an activity. After all, who wants to be left out? Nobody wants to be the only person with a typewriter, when everyone else has a laptop. Group buying satisfies the basic need to belong.

The group buying trend has recently made a huge following on the internet. Since the net is worldwide in scale, some brainiac conceived of a scheme encouraging the most number of people to collectively avail of huge discounts by buying hundreds of identical items.

To the consumer, it is mass marketing. To the establishments offering the discount, it is clearly a sure-fire way of ensuring hefty sales. To the financial world, it is a clever way of exchanging big bucks.

Group Discounted Buying on the internet is where "likeminded, action-ready citizens and consumers can now go online and connect, group and ultimately exert influence on a global scale. Call it group power, call it crowd clout", according to James Pruett, entrepreneur and sociologist.

It is when a group of consumers come together and use the power of numbers in exchange for discounts.

It may seem as though the groups offering the discount is losing money, but it is actually a sure way of ensuring that stocks or services do not last long on the shelves. The same theory applies to store sales - they hold sales to make sure that stocks are bought and replaced by newer models. Group buying however, makes sure that there are multiple sales. And multiple sales, though discounted, translate to increased patronage. Oh, and one must never forget the possibility of a repeat purchase by the buyers who availed on the discount. Chances are, the products would never have been on the top of the buyer's life, had it not been for the group buying deal.

So is this new trend profitable? For the seller, it sure is. The concept is simple - just tolerate a decreased profit, but make up for it by having multiple sales. To the consumer, is it the a better option? Of course it is. Buying discounted is always better than paying full price.

In the long run, both the consumers and retailers are happy...