Comments on: How Brands & Retailers Can Profit from the Social Commerce Group-Buy Trend

By: Running Your Group-Buy Event: 76 Practical Tips from Industry Pros | Social Commerce Today

Wed, 09 Nov 2011 08:33:18 +0000

[...] Marsden (Social Commerce Today) How Brands & Retailers Can Profit from the Social Commerce Group-Buy Trend (April [...]

By: ||| Handelskraft ||| Der E-Commerce und Web 2.0 Blog - Clone Wars und die schlafenden Klone?

Fri, 11 Jun 2010 14:34:35 +0000

[...] Schlacht der Groupon-Klone. Ein weiterer Kampf könnte jedoch bald folgen. Mittlerweile gibt es über 15 Groupon-Klone auf dem deutschen Markt und es werden immer mehr. Der Streit wird sich wahrscheinlich nun nicht mehr nur um die Anzahl der [...]

By: Jeff Molander

Jeff Molander — Tue, 11 May 2010 15:03:05 +0000

Hi, Paul…
Very interesting thoughts. I agree, could happen and could benefit retailers. But I’m not sure how much. And I’m quite certain that group buying as you describe it is about as palatable as mobile shopping comparison. That’s just my opinion.

Re: retailer-as-broker — ok. I really like that and Dell is a great example. But they’re a manufacturer right!?

Oh, we agree — it’s compelling. That is nearly indisputable. But for retailers to own this and call their own… I’m just not convinced. But I’d enjoy being swayed.

By: Paul Marsden

Paul Marsden — Mon, 10 May 2010 18:22:51 +0000

Hi Jeff, thanks for comment, and agreed that Groupon is a peculiar retail model – selling online vouchers for offline purchases.

But I do think the 4 Phase approach offers an approach for ‘how’ retailers could profit from Group-Buy; For example, in phase 1 retailers could profit from Group-Buy by adding a group buy forum thread/section that could generate more sales by allowing customers to club together and buy in bulk… Then linking this into inventory management based on group-buy demand… etc, etc (phases II-IV).

IMO the big idea here is “retailer-as-broker”. Dell with their Dell Swarm group-buy feature offered an early version of how this could be done… Not perfect by any means, and there’s lots of room for improvement and innovation. Nevertheless, I think online shopping events with dynamic pricing based on demand levels will become increasingly compelling component of e-commerce…

By: Jeff Molander

Jeff Molander — Mon, 10 May 2010 18:15:50 +0000

Sorry — one other point re: Groupon’s business model.

Groupon is today’s Restaurant.com. We’ve seen this before and the market will soon reject Groupon’s main value proposition: Valuable new customers. Retailers who look beyond foot-traffic will realize (over time) that at best Groupon represents an opportunity to cover rent — not boost or even significantly contribute to profit.

But not before VC’s make their money and founders exit. As Restaurant.com learned years ago in its early stages, local merchants had limited appetite for what amounts to a new spin on the “loss leader” approach to customer acquisition. And here’s why: Customers become conditioned to expect deals that retailers cannot actually afford to give. Bottom line: New customers (that the retailer can actually make a profit from) don’t actually appear.

I’m surprised that we’re not talking more about what we already know about these kinds of businesses.

By: Jeff Molander

Jeff Molander — Mon, 10 May 2010 18:06:04 +0000

Hi, Paul…
Indeed, but your promise was to explain how in this article. I’m not trying to nag you (I’m a loyal reader and appreciate your efforts) just pointing it out.

And I realize that Groupon et al are profiting — wildly. But let’s face it. Retailing and Groupon’s model? They have not only very different buyer dynamics but profit margins that could not be any further apart from each other. So I’m not so sure that the success of vendors is any indicator whatsoever of the opportunity for retailers. This is not to say there is none… there is IMO. We seem to agree on that point but not on how to get there.