Chinese group buying explained

The Chinese Internet is more developed from a social perspective than in the West. There are more people who are participating in these kinds of conversations, and they are more active.

Nice article on Tuangou, Chinese ‘group buying’, and why it is not (yet?) working in the West.

Excerpts from Lara Farrar:

“Welcome to China’s hottest sport for shoppers: tuangou, or team buying.

The game goes like this: Individuals band together via online BBS (bulletin board systems), chat rooms and other Web forums around products they are interested in purchasing, from fast food to cars or furniture. Once a team amasses enough members, their appointed captain approaches retailers to organize in-store haggling sessions.

“The final price was beyond my expectations,” said Ellen Liu who recently bought a purple Toyota Yaris after her team called “Shanghai Yaris” negotiated a 30,000 yuan ($4,400) discount with a local dealer for each of its 40 members wanting to purchase the car. “We were very surprised.”

Since bartering teams started to emerge around five years ago, they have increasingly become a defining characteristic both of online and offline consumerism in China, reshaping the way retailers reach out to customers on the Internet as well as how they interact with them in stores.

A number of companies, like the electronics chain Gome, have started to deal directly with the groups, while dozens of professional tuangou Web sites have also emerged. Retailers say they often feel they have no choice but to join the bartering or lose business. Some retailers wait months just for an invitation to take part in an event.

The tuangou Web sites negotiate prices on behalf of shoppers while guaranteeing quality products and customer service. They also offer companies valuable market research based upon the conversations consumers are having about products on their online forums.

“We are one of the most influential web sites here in China,” said Deng Huajin, founder of Qeeka.com, a group purchase site that has over 500 employees working in 22 branches across the country along with around one million registered users.”