Group buying to re-emerge in e-commerce's ‘new normal'

The group buying trend may be on its way back, amidst the rise of pandemic-impacted e-commerce and changing consumer behaviours.

As brands go online amidst the “new normal,” group buying might see its peak yet again.

Group buying is a re-emerging trend wherein a group of people within the same neighbourhood or community will buy products in bulk, taking advantage of discounts based on the overall amount of combined purchases. The entity who organises the group buy and delivers the goods then receives a commission.

The business model has been first utilised in China, as consumers tapped into the WeChat Mini Programs and WeChat groups upon coordinating purchases. The community leaders handle last-mile delivery, acquire new customers, and coordinate purchases. They are then given 8% to 10% commission on average.

In Singapore, some group buying is now being coordinated over WhatsApp, and the most common list of products in demand includes fresh produce, condiments, dried goods, and meat.

With the rise of e-commerce platforms and changing consumer behaviours brought about by the Covid-19 pandemic, group buying has started to regain traction amongst consumers.

WEBUY co-founder Vincent Xue aims to bring the model to Southeast Asia’s food and beverage (F&B) e-commerce scene. The social e-commerce platform gives both merchants and consumers an opportunity to source for and provide novel F&B items, whilst also helping businesses expand, he says.

The platform currently supports 3,000 group leaders and 100,000 consumers across Singapore, Malaysia, and Indonesia.

Earlier, in February last year, online retailer JD.com also launched its community group buying business Friends Shop. The business has collaborated with local markets and marketing cooperatives to purchase grocery products and other daily necessities, with its staff packing the products based on options picked by consumers.

It served around 200 residential compounds in Wuhan, China, during that city’s strict virus-related lockdown.

The outbreak has paved the way for such innovations, leveraging on added safety measures, convenience, and a renewed sense of community in some parts of Asia.

According to Rakuten Advertising’s recent consumer study “The Road to Recovery: 2020 Shopping Peaks Re-Imagined,” 47% of Singaporeans planned tol turn to friends and family for holiday shopping inspiration over the end of 2020 season, which explains the effects of and possible opportunities from group buying.

Retailers can use this opportunity to consolidate their customers much easier, with group buy leaders focussing on coordinating purchases. However, they need to understand changing consumer behaviours first before implementing the model in their businesses.

Reaching consumers in groups is also much more convenient due to social media. The Rakuten report advises on investing in low-risk upper funnel strategies that engage customers, including social media advertising.

“Utilise data-led targeting capabilities to reach consumers with relevant, engaging and timely ads on the platforms that align with brand values,” the report reads.

According to the report, brands can leverage on the agility of performance channels to test new technologies and partners, which includes employing mobile strategies and dynamic commissioning technology.