| Tuángòu | |||||||
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| Traditional Chinese | 團購 | ||||||
| Simplified Chinese | 团购 | ||||||
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Tuángòu (pronounced "twangoo"), which loosely translates as team buying or group buying (also known as store mobbing), is a recently developed shopping strategy originating in the People's Republic of China. Several people - sometimes friends, but possibly strangers connected over the internet - agree to approach a vendor of a specific product in order to haggle with the proprietor as a group in order to get discounts. The entire group agrees to purchase the same item. The shoppers benefit by paying less, and the business benefits by selling multiple items at once.[1]
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The tuangou phenomenon has been most successful in mainland China, where buyers have leveraged the power of group buying, which has led to English language media, such as msn.com, profiling the tuangou buying process.[2] The popularity of the strategy in China is often attributed to the Chinese tradition of bargaining for the purchase of goods of all types. Tuangou buying also ameliorates a traditional distrust of goods purchased from unknown sellers as individual members of the buying group can vouch for a particular seller's quality to the rest of the group.
Group buys are a variation of tuangou buying that also occurs in China, in which an item must be bought in a minimum quantity or dollar amount, otherwise, the seller will not allow the purchase. Since individuals typically do not need multiples of one item or do not have the resources to buy in bulk, tuangou group buys allow people to invite others to purchase in bulk jointly. These group buys often result in better prices for the individual buyers or ensure that a scarce or obscure item is available for sale. Group buys usually happen when dealing with industrial items, such as single-board computers.[3] However, recently group buying is spreading to the consumer space as well, leaders such as MeiTuan, LaShou in Beijing, Twangoo, FunShare - 享樂網 in Hong Kong, are quickly gaining acceptance. There are more than 800 tuangou websites in China.
English-language group-buying platforms are also becoming popular. In 2010, the lifestyle magazine City Weekend launched a tuangou service for expats living in China, FlashBuy. Other tuangou offering deals in English include Tuanpin, EnjoyMeiTian, GetGoGive.
Group buys are often organized by like-minded people through Internet forums. There have also been recent attempts at creating more focused online forums such as GroupBuyCenter.com.[4] and Tippr.com The vast majority of the users tend to focus on after market autoparts and have now also started to leverage the group buying model for purposes of buying other consumer durables.
Although initially a Chinese concept, recent developments led to a wide increase of appearances of similar phenomena, in Europe and North America. While the original strategy was self organized and executed, most of the group buying in this part of the world is done through online intermediaries. Interested buyers are, most often, asked for credit card details, which will be charged only when a required number of buyers registers. Almost without an exception, intermediaries charge vendors a percentage fee in the range of up to 50% of the total value of the whole deal. Due to such a business model, group buying remains limited to the physical services sector, and is not seeing growth as the original strategy in the People's Republic of China. Nevertheless, intermediaries with fairly identical business models are appearing daily, especially across the United Kingdom and Germany.
The most notable characteristic of all those intermediaries is the selected deals' orientation towards local markets, bound to cities and towns. Leaders include Groupon, which has 79% of the market share, LivingSocial (8% share) and BuyWithMe(3% share)[5]
In 2010, several new business models for group buying have been proposed, emerging from the overall popularization of micropayments. After the offer's deadline, buyers make direct purchases from the vendors' web sites, achieving higher mutual benefits. The most prominent company in this area is Next Jump, which handles a line called 'Overwhelming Offers', offered through many loyalty programs, including Borders Rewards, MasterCard Marketplace, and their own website. This method does not charge percentage fees, but uses reservations as pledges of interest for after-deadline purchases.
Following the success of the intermediary group buying model adopted in Europe and North America, group buying websites such as Twangoo South Africa, Eishcoupon, Justhenga and Wicount have recently launched in the South African market. All adhere to the group buying business model, although few stick to the original 50%–90% discount. Deal aggregators like AllDeals are also appearing in the South African market. These websites distribute deal updates to consumers based on the user's location.
South America as an emerging market has yet to see popularization of new purchasing models such as group buying. First intermediaries appeared recently in Brazil with slightly different business models than those proposed in Europe. Notably, the difference is in the way volume discount is achieved, as a post-purchase rebate instead of an instant discount, allowing for an immediate buyer's purchase. Major criticism for such model is in the lack of aggregation and unfit differentiation between buyers - those that wish to purchase immediately at any price and those that are willing to sacrifice time for discounts, eventually costing the vendor potential profits.