Why do brand e-commerce companies engage in group buying?

Group buying has become a marketing activity spread by e-commerce platforms. Through group buying, more transactions can be achieved, but not all products are suitable for group marketing.

1. What is group buying?

In the group buying business, because merchants hope that more customers will buy goods, based on this, merchants offer low price concessions on specific goods and give group purchase discount prices that are lower than the retail price.

When customers are able to organize themselves into groups and get together enough people to place an order to purchase goods, they can enjoy a group purchase price that is more favorable than purchasing individually.

Based on the low price of the goods, customers are encouraged to initiate group purchases, share the information with their friends, and place orders together to purchase the goods.

It can also lower the purchase decision threshold for group customers based on the low price of the goods and the trust endorsement of the group initiator’s invitation as a friend, and encourage group participants to buy goods together.

Group buying is a marketing activity launched by merchants in the hope of bringing about a spontaneous sharing and dissemination effect through customers' social relationships. When multiple people buy together, they can get the goods at a more favorable price.

2. What are the benefits of group buying for brand e-commerce ?

1. What does brand e-commerce need?

Brand e-commerce is an e-commerce mall that only sells products of this brand. Branded products will have a specific target customer group.

Why do brands have specific target customer groups?

This is because it is impossible for a brand to serve all markets. Therefore, it is necessary to determine the target market, consider what kind of people to serve, what kind of products to provide, and what problems to solve. With a clear target customer group, we can provide products that better meet customer demands and enhance our market competitiveness.

Based on the brand's target customer groups, when the brand is expanding its customer base, it also hopes that the new customers are in line with the positioning of the target customer groups. Such customers have stronger demands for brand products and have more subsequent value to be tapped.

For example:

Babycare is a brand of maternal and infant products, focusing on the research and development of nutritional supplements, maternal and infant health products, maternal and infant products and other products.

The brand's target customer groups are pregnant mothers and mothers who have just started their pregnancy, and it provides them with maternal and child products.

Because pregnant mothers are about to have babies, they will pay attention to and purchase maternal and child products. Mothers who have already given birth will also need to buy maternal and child products.

Therefore, when the brand hopes to expand new customers, it will hope to attract pregnant mothers or mothers who are about to have babies, because these customers have a continuous demand for the products provided by the brand and may continue to purchase the brand's products.

2. What can group buying bring?

(1) Bringing new customers to the brand

For group buying activities, after the group owner starts the group, other people need to join the group before they can purchase the group buying products.

In order to successfully purchase the group product, the group initiator will share the activity with his friends in accordance with the activity rules and invite them to buy the product together in order to achieve the group initiator's purpose.

When sharing, the person who starts a group hopes to increase his chances of success, so he will look for people who are more likely to buy the product after he shares. These people should have similar demands as the person who starts the group, that is, a group of people who are close to the target customer group.

For example:

Xiaomei is a mother with a 3-year-old baby. She recently wanted to buy a children's toothbrush for her baby. A few days ago, she discussed with other mothers in the mothers' group about which toothbrush to buy.

Xiaomei saw a group buying event for children's electric toothbrushes in the Babycare brand mall. The price when purchased individually was 89 yuan, but it only cost 69 yuan when purchased in a group.

Xiaomei thought this toothbrush was pretty good, so she started a group buying campaign, and then shared the invitation to join the group buying campaign with the mothers’ group, asking if there were any mothers who wanted to join the group buying campaign and buy this electric toothbrush for their babies.

Therefore, brand merchants can limit the rules of group buying activities. After the group is opened, a specified number of new customers need to be attracted to join the group in order to successfully form a group. Both the group initiator and the group participants can purchase the group products at a low price.

Based on such group buying activity rules, when the group buying products offered by the merchant have sufficiently low prices, the person who starts the group has the motivation to attract new brand customers around him to join the group in order to purchase the products, thus completing the group buying.

In the process of attracting new customers through group buying, the cost can be postponed, and this part of the customer acquisition cost will be incurred after the new customers are attracted.

This is because, in the group buying business, the cost of acquiring new customers mainly lies in the low price concessions of goods. The cost of this low-price concession does not result in any profit loss for the merchants for customers who do not form a group. It only generates orders for goods that are successfully grouped together.

In other words, the customer acquisition cost of the group buying business is postponed.

When the customer acquisition cost is postponed, the merchant can have a higher degree of certainty in the return on the money invested, because the corresponding cost is only incurred when the merchant acquires a new customer who purchases and places an order in the mall.

In other cases, customer acquisition costs, such as TV advertising and influencer promotion, need to be paid before acquiring new customers, but when the costs are paid, there is no certainty as to how many new customers can be acquired.

(2) New customers get to know the brand through invitations from friends and have a sense of trust in the brand

The person who starts the group buying activity will spread the brand's group buying activities to new customers and friends through social connections.

For these new customers, they get to know the brand based on invitations and introductions from friends. The sharing of friends itself conveys a certain degree of recognition of the brand.

Therefore, new customers will also have a certain degree of trust in the brand's products and feel more secure and reliable.

3. What type of brand e-commerce is suitable for group buying?

High-frequency fast-moving consumer goods are more suitable for group buying activities.

High-frequency fast-moving consumer goods are more likely to generate purchasing demand. This is because fast-moving consumer goods, as items that need to be used and consumed frequently, are easily used up, which in turn generates new purchasing demand. Therefore, consumers often need to buy fast-moving consumer goods in their daily lives. Fast-moving consumer goods are mostly daily necessities for consumers, such as beverages, food, daily necessities, etc.

For group buying activities, the person who starts the group needs to invite friends through social connections to join the group purchase and then complete the group buying. When there is a purchasing demand for the group purchase product for the group creator, and the probability of successful group purchase of the product is relatively high, consumers will be more willing to spend energy to create a group and invite others to join and complete the group purchase. That is, the invited participants are likely to have purchasing demand for the group-buying products.

When fast-moving consumer goods participate in group buying activities, the person who starts the group has a relatively high frequency of purchasing needs for such goods, and also considers that some of his friends are likely to have this purchasing demand. Therefore, they are more willing to start a group and invite friends to join the group purchase to complete the group purchase.

Example A:

Xiaomei saw a group buying activity for paper towels in the mall, and thought that the paper towels at home were almost used up, so she just needed to invite one more friend to join the group buying.

After Xiaomei started the group order, she shared it with the group. Soon, some friends started paying and joining the group order. My friend said that he was planning to buy some paper towels to replenish the stock. The paper towels at home are used every day and are consumed quite quickly. It just so happens that this paper towel is cheap so he can buy some to replenish the stock.

Example B:

The hair dryer at Xiaomei's home suddenly broke down and she needed to buy a new one. Xiaomei saw that the hair dryer she wanted to buy was on a group buying promotion, which was much cheaper than buying it individually, but she needed to invite one friend to join the group in order to buy it at the group price.

Xiaomei didn't know if anyone needed to buy it in a group, so she thought she would ask first. She asked a few friends around her and found out that none of them had the need to buy a hair dryer recently, and their existing hair dryers were still working well, so there was no need to buy a new one.

So Xiaomei decided not to join a group purchase to buy the hair dryer, and bought it directly on her own.

IV. Summary

Group buying is a marketing activity launched by merchants in the hope of bringing about a spontaneous sharing and dissemination effect through customers' social relationships. When multiple people buy together, they can get the goods at a more favorable price.

Based on the characteristics of group buying, brand merchants can bring in new customers that match their target customer groups by setting rules for activities where old customers bring in new customers. Moreover, these new customers are introduced to the brand through invitations from their friends and will have more trust in the brand.

At the same time, when group buying acquires new customers, its customer acquisition costs are postponed, which can make the merchants' invested funds and profits obtained more certain.

Among the many types of branded goods, high-frequency fast-moving consumer goods are more suitable for group buying activities because they are more likely to generate purchasing demand. Make consumers more willing to start a group and invite friends to join the group purchase to complete the group purchase.

Author:q

Source: Product BBQ