A recent craze to sweep across the digital world, group or collective buying, has resulted in many a spa treatment sold. Ask a colleague which platform they’re with – is it the massive Groupon with its preparation for a $25 million IPO or one of the many celebrity-backed newcomers like South African based GarethCliffDeals?
Should every brand jump on the group buying bandwagon? Surely the method could suit any brand or product if everyone from hotels to car dealerships offer deals? Think again.
With group buying comes some risks. These range from not making a profit to negative brand exposure. Consider these four questions before taking the plunge:
Let’s say you sell custom-made toilet seats, do you really think you’d get enough buyers to “tip” the deal?
Even if you aren’t selling an unusual product, you’ll need to consider your actual target market. Its pointless signing up with a group buying website if your target audience has no Internet access or experience in online shopping.
3. Do the numbers make sense? Will the value I get from brand awareness outweigh the cost?
Let’s face it; group buying isn’t about quick profits. Most group buying websites dictate that you get a massive discount (why else would consumers flock to these portals?), while still offering the same standard of quality and service as one usually might. On top of this, the portals themselves usually take a cut too. This means that your profit margins drop significantly.
One benefit from carefully considered group buying is massive brand exposure. A successful deal will see an influx of new and existing customers, a high number of products sold or services rendered, and finally, ‘free’ advertising in the form of exposure. These are awesome payoffs, but you need to first break out that old Casio and crunch some numbers.
