The Internet Brings Back Group Buying

My commerce teacher in High school listed several types of
cooperatives in her class. The teacher, possibly the prettiest in the school
had the undivided attention of the all-boys class twice a week and her lesson
on cooperatives sunk in well as a result. Amongst these groups of people, she
described consumer cooperatives. This was an organization that brought together
several consumers, on account of their numbers they would negotiate with
manufacturers and traders to make their household shopping cheaper.

This organizational model was
then put under severe pressure by the emergence of supermarkets that in many
ways did the negotiating with producers on behalf of the consumers.
Supermarkets on account of making huge volume purchases would haggle down
manufacturers and then aggregate them in stores. A consumer walking into these
would then obtain several good bargains from many manufacturers on account of these
new retailers.

Social media has revived this
same model and in very unusual ways. A new type of retailer is slowly emerging
as the negotiator between the consumer and the producer. Group buying websites
like Groupon, Zetu and Rupu negotiate with producers for steep discounts. They
then place the merchandise on their sites with a caveat that the price only
applies for a minimum number of orders. The deals are also offered on a
geographic basis so as to enhance their relevance to the both buyers and
sellers.

Another internet and social
media fad! Well think again. For starters, social business is starting with a
potential aggregation of over a million people. Secondly, the model works on a
localization that goes as micro as you want it. So consumers of Limuru and
producers within their environment can be aggregated on these platforms.

The price down on these
platforms also comprises an amazing opportunity. Say you run a shop with
several slow moving products. Holding such products may cost more than selling
large volumes at a discount and this is where Social business sites work magic
–moving slow stock. The world’s largest supermarket chain just acquired a group
buying company and this trend is likely to continue.

And there is another attraction
to these sites; consumers around the world prefer peer recommendation to other  forms of product promotion.  That means that Mrs. Kamau would rather
hear it from Mrs. Otieno rather than be told by an advertiser.  In Kenya, where the Kiama is the basis
of social aggregation for many people, the concept of doing things with your
neighbors is likely to find acceptance.

On the down side transacting
online still remains a challenge.  
Kenyans possibly don’t trust invisible payees, as they have a dodgy
history with many people they may have paid this way. Online transactions also have their share of
complexity and the average consumer has to be up on the IQ scale to navigate
the transaction process. That could slow things a little.

The model however works with our
socialization and mirrors the way we do things offline. Am betting on its
success. Especially if the transaction complexity can be fixed. This could be
the new face of retail. Someone just figured a mega way to make social media
pay.