Groupon & Others Offer Collective Buying Power

Thu, Dec 31, 2009

Collective buying

One of the best ways I know to spend wisely is to learn about and take advantage of new innovative ideas. The internet is growing with an enormous amount of exciting tools to help us connect, share ideas, and leverage services that provide value to our everyday life.

The Grocery Game

For example, The Grocery Game is a gem, in my opinion; I learned about it a few years ago and it has saved our family a lot of money. This creative online service provides the necessary guidance for turning your home into a grocery store stockpile where the products are purchased at the lowest possible prices. For a small fee you can subscribe to a weekly shopping list of the best deals at your local store and you’re set to start saving money.

Collective buying power

And recently I picked up my Business Week magazine and learned about a new type of group or community shopping service. Within this community, retailers sign up to offer mark downs on their products. But they will only go forward with the offer or sale if enough people have committed to the purchase of the product or service online. In other words, collective buying power wins the deal!

It’s a win-win in my book. The merchant is moving product at the volume they desire (they set the quantity of people who have to agree to buy) and the shopper is getting the discount that saves money.

According to the article, some of the more well-known sites offering this service are Groupon, LivingSocial and BuyWithMe. Groupon is apparently the most well-known with 1.5 million members. It has only been around a year and has been launched in 45 cities total.

Groupon

To learn more about this new social shopping craze, I decided to venture on over to Groupon to see what I could find out. First, signing up is easy. All I had to do was enter my email address. The website automatically recognized my city. Keep in mind there are different offers for different cities.

Once I signed up, I was told I’d receive my first deal via email the next day. And that I did. Everyday thereafter, I’ve received an email with the deal of the day. Some are of interest and some I just pass over.

How Groupon describes their service

Each day, Groupon features an unbeatable deal on the best stuff to do, see, eat, and buy in your city. By promising businesses a minimum number of customers, we get discounts you won’t find anywhere else. We call it “collective buying power!

Each day Groupon features something cool to do at an unbeatable price.
You only get it if enough people join that day… so invite your friends!
Check back the next day for another awesome Groupon!

If you see something you like, just click buy. If enough people sign up before midnight the same day, you get the deal. Obviously, there’s incentive to let your friends know about the deal, so they provide a way you can easily send a referral from the deal you see. The more people the better chance the deal won’t be cancelled.

What happens if the Groupon doesn’t reach its required minimum number of purchasers? According to Groupon, if not enough people sign up, then the deal is cancelled, and you won’t be charged. So if you really want the Groupon and not many have signed up you really have some incentive to advertise the deal to your network of friends.

Final thoughts

What’s next for such services? With online collaboration and social media continuing to be hot, I think more and more people will be interested in going online for such deals. In my opinion, you just can beat getting the deal delivered right to you without having to shop around town.

My advice: Sign up for more than one service (Groupon, LivingSocial and BuyWithMe) so that multiple deals get sent to you in the same day. Oh! And why not start a collective buying power group somewhere? You could get your friends to follow along on your favorite sites to take advantage of the day’s latest and greatest offers together.

What do you think about collective buying power and this new form of getting online deals?

Personal Finance Blog Carnivals

Below are some recent carnivals I participated in. If you’re not famaliar with a blog carnival, think of it as a weekly magazine that includes some of the best articles around the personal finance blogosphere.