Group BuyingHow and Why it works

Alex WhitesideFinal Year Student

Bachelor of Internet Science and Technology (Internet Commerce)University of Wollongong

What is Group Buying?

• Group buying, also known as collective buying, offers products and services at significantly reduced prices on the condition that a minimum number of buyers would make the purchase.

How it works?• Each day an item is featured and

communicated through social media and email newsletters.

• High priced items, sold at a discount• Business owner sets the

minimum/maximum number of coupons• As a business can be guaranteed a

minimum amount of customers they can set really low prices

• Customer pays upfront so they are locked into the deal

• Customers share deal around social media to ensure the deal reaches the minimum number

• Customer visits the merchant with pre-purchased coupon

Advantages over other Media

• Reach a large market with no upfront costs• Can be targeted to a known demographic

through social media• The deal can go viral increasing brand

awareness• Customers may invite their friends (who

may not have coupons) to come along while they redeem their coupon

• Easy to limit discounted sales, if necessary, not very easy with printed coupons

• Have a creative written up on your business at no cost

• Increase SEO (Search Engine Optimisation) for your website.

Would you turn down a $6 billion offer from Google?

Groupon did

Google’s $6B offer to Groupon

• Just before Christmas 2010, US Group buying leader groupon.com rejected a US 6 billion dollar offer from Google.

• Groupon has also entered AU market and has been forced to operate under different brand StarDeals.com.au due to trademark issues.

More then 11,000 sales in 1 day

So, Google did it themselves• Google have realised the future of online commerce. Google

now dominate their paid advertising, and “Place” pages with local deals. Best of all, it’s free.

Spreets, a $40M Offer!

• Recently, in February 2010, Australian based group buying website Spreets.com.au sold to Yahoo7 for $40M – when only 10 months old.

The future of e-Commerce?

• Businesses now have a new medium to market and sell their products and services.

• Daily deal sites have changed the way we shop.

• Social media will have a big influence on the future of this industry.

Group Buying in Wollongong

• As of yet there have been no daily deals in Wollongong.

• Although, a website I run, SealTheDeal.com.au is focused towards operating daily deals in the local area.

Questions?