Group purchase, which I first wrote about in May of 2006, has become a popular trend on the Internet in China and a powerful way for netizens to get good deals and cheaper prices on all types of products, including larger items such as automobiles. Until recently, online group purchase activities were only initiated by individual consumers, who came together independently in BBS forums to get a cheaper price on certain products. In a new trend brands and communities like KDS are recognizing the power and influence of this popular part of net culture and have begun sponsoring formal "group purchase" events and campaigns.

In this issue of IWOM Watch, we look at the evolution of "tuangou(团购)" or "group purchase" which is now changing from a grassroots effort initiated by netizens to a brand sponsored campaign strategy in targeted BBS communities.

Case Study

Group Purchase: Retailers reverse the trend
(网络团购:不再是网民的自娱自乐)

Summary

In September, Gome, the biggest home appliance retailer in China, decided to collaborate with KDS, one of the most popular BBS groups, to launch a group purchase opportunity for KDS users only. In just 10 days, the announcement post received over 800 applications, far beyond the 250 application requirement.

Furthermore, even after the group purchase, netizens continued to discuss the event and praise the organizers for offering the group purchase. Given the overwhelmingly positive response, KDS is expected to host more collaborative group purchase events by netizens in the future.

CIC View

Until recently, online group purchase activities were only initiated by individual consumers, looking to get products at a cheaper price. However, given the demand and popularity of group purchase, BBS community owners and companies alike are looking to leverage the popularity of this trend by organizing group purchase activities themselves.
Popular BBS communities already have a dedicated fan base. By launching organized group purchase deals within BBS communities, brands have the opportunity to tap into this loyal user base to not only gain access to potential customers, but increase awareness in the process. Furthermore, netizens provide feedback on the products and online event post-purchase. This can be an effective supplementary sales strategy to attract new customers and engage consumers online.

Below is a screen shot of the index for the full IWOM watch report:

For related articles, see below:

How IWOM is Redefining the Relationship between Brands and Consumers

IWOM Watch July 16-31: Plastic bags banned, so BBS communities create their own "green" bags

Interview on CBC radio about tuangou "group purchase" in China

Internet word-of-mouth trends in 2008