What’s next for group buying

South African consumers, following the lead of Europe and North America, have recently discovered the international retail trend called “group buying”. Over the past year, ambitious entrepreneurs and even established media brands have launched websites offering daily deals that are only triggered once a minimum number of people express an interest in them.

Group Buying 2.0

As industries in the early stages of their lifecycles, mobile and social media technologies need to be much more integrated into the offering before group buying becomes a mainstream activity. Fortunately, with relatively high cellphone use and Facebook penetration in South Africa, including more multifunctional smartphones, we are well positioned to increasingly socialise group buying; something that will highly benefit both businesses and consumers.

Like the early days of any novel enterprise, a shakeout is happening in group buying. The industry has seen a number of players emerge in rapid succession over the last year or so, but only a few services will stand out as reliable, trustworthy and innovative in the end. Consolidation has begun, with one of the first group buying services in the country recently being bought out, but beyond outright takeovers, the social and mobile aspects of our collective connectedness have yet to be fully exploited by most of the local players.

To date, group buying services in South Africa have relied heavily on email to communicate with subscribers. This “old school” method of communication is mainly one-way, offering a deal and eliciting a call-to-action from consumers. This yes-or-no dynamic is based very much on the appeal of the deal rather than on developing a relationship with the consumer and their network of friends, family and contacts. There are a number of comparably inexpensive (but far more interactive and insightful) social applications that can deliver similar deals in such a way that they are sourced from the audience at which they are directed.

Facebook nation

For example, South Africa has almost 4-million Facebook users (second only to Egypt in Africa), an increase of almost 10% since last year. Local online consumers check their Facebook daily to share their opinions on various brands, experiences and topical issues. Group buying services have a ripe opportunity to tap into this massive (and growing) group of consumers to hear what kind of deals they would like to see, as well as to receive feedback on deals already offered.

For businesses, socialised group buying facilitates online conversation in a neutral environment about a product or service; something that is far more valuable than mass marketing alone. Establishing an online community is essential to adding credibility to the merchant/consumer relationship. According to a recent report from Gardner research, social and mobile marketing will influence at least 80% of consumers’ discretionary spending. In the words of the study’s author: “Today, activity on the internet has shifted back to its roots in interaction and participation.”

Add to this the growing prevalence of mobile phones with Android, BlackBerry and iPhone operating systems and you will see many more transactional opportunities between communities of like-minded individuals beginning to emerge. The proverbial “value add” of this arrangement is that the communities source and endorse deals, putting the control of what is cool, new and appealing in the hands of consumers.