The power of many

The concept of group buying power is not new to South Africans. Stokvels, where groups of people get together and pay money into a group kitty which is then divided up or can be drawn on by members, have been part of the South African landscape for many years.

For more info on specific deals . . . see the Dealify advert to the right.

When people come together to make a purchase, they have the power to negotiate higher discounts and special deals. It didn’t take long for the concept of group buying to attract the interest of internet business sites. In November 2008 in Chicago the concept of group buying or online social buying hit the World Wide Web. It took just two years for South African entrepreneurs to spot a good opportunity and the first local group buying sites began appearing in 2010.

Special deals

The power of group buying online lies in offering members bargain deals on products and services. You simply join the group and every day you are alerted to special deals ranging from discounts at restaurants, spa and hair treatments and tickets to theatre shows and products. The benefit for members is that they can save money, which is especially appealing during tough economic times and for business owners, deals sold ensure feet through the door. It’s also an ideal way for new and small businesses to showcase themselves. And providing they give good service, to earn customer loyalty and repeat business.

The first group buying site in 2008 was the American site Groupon. In South Africa there are around 20 sites – with www.dealify.com offering a uniquely “hyper-localised” offering to its clients.

What makes Dealify a different offering is that while most sites offer deals that are city specific, Dealify offers hyper-localised deals. This means that you will be alerted to deals in your immediate neighbourhood. The obvious benefit is that you don’t have to travel to the other side of your city to take up the deal which saves you money, and for businesses it grows the local customer base, visibility and client loyalty. It’s a fundamental practice to offer deals close to the consumer which means that long-term relationships can be built up. Nobody wants to spot a great deal and then find that it is too far away to take advantage of.

Incentive

The way to make a group buying system work well and enable it to offer more deals to its clients is to get more people to join it, so often members are offered an incentive to share deals with friends via Facebook, Twitter, or email and to incentivise them to do so with offers of cash rewards to be redeemed on deals.

It’s simple to use. Once you have signed up you will be alerted to the “deal of the day”, you check it out and if you want to buy it you click on purchase, and then share it with your friends via Facebook because who wouldn’t want their friends to share in great deals? Sharing is part of what collective buying is all about. For any deal to become active there must be a minimum number of deals purchased. If the minimum is not reached the deal is off and you will be refunded your payment.

Group buying is also a natural booster for the economy, especially for small businesses.We are still in the transition phase, moving slowly out of the economic meltdown and many people have cut down on luxuries. Deals offered through the group buying model give small businesses the opportunity to market themselves effectively and give consumers a cost-effective way to enjoy their downtime and do things they wouldn’t usually do.

Although South Africa’s e-commerce market is still small compared to the international market, we are sitting on the cusp of an explosion. The beauty of group buying sites is that they give non-transactional internet users the opportunity to start buying online. This applies to people who use the internet for email and Facebook. Because the deals offered are usually attractive to all ages and interest groups it’s a great launch pad for people to learn how to navigate e-commerce and learn to trust it.

At the moment potential also exists to burst into the mobile application market once challenges around payments for deals that are often time-specific have been ironed out.

**By Kevin Tucker, the General Manager of Dealify