E-commerce operations, customer acquisition ideas for social e-commerce group buying!

Friends who have been paying attention to the e-commerce industry recently must have often seen this kind of news:

• Suning.com has launched the 2019 New Year Shopping Festival. At the same time, Suning Store will soon launch a community group buying service and will recruit 100,000 group leaders across the country.
• JD.com’s mini program quietly launched “Youjia Shop”, positioning itself as “JD.com’s official community shopping platform”, focusing on the community group buying market in second- and third-tier cities;
• Pinduoduo invested in Chongma Neighborhood Group, which has been deeply rooted in Shanghai's Pudong area for several years, and officially entered the community group buying industry.

The social e-commerce model is still very popular in 2019. Not only do major e-commerce players continue to increase their social gameplay, but they also draw a new track for social e-commerce - community group buying.

So why does the group buying method have such great magic that it can attract so many companies to invest huge human and material resources in its development? Is the social group buying model really that magical?

1. Overview of group buying gameplay

Group buying is a fast and effective marketing activity. It uses fission method to encourage participants to spread the message spontaneously, which can be called a marketing magic tool. The main way to play is that within a limited time, the more people you invite to buy, the lower the price.

Compared with traditional e-commerce methods, the biggest feature of group buying is decentralization, building a communication chain with users as the core. In a short period of time, by spreading among users in the same circle, a large number of accurate customers can be accumulated.

The initiators and participants of group buying all share and complete transactions through WeChat. This gameplay can stimulate consumers' enthusiasm for low-price consumption and encourage consumers to spread the message spontaneously.

For merchants, they can set the promotional products, discount prices, promotion time limit, number of people in the group and product information in the background, requiring users to meet the number of people in the group and successfully pay within the agreed time to purchase the products at a discounted price.

The core of group buying is to utilize social networks and trust among acquaintances. Invitations from relatives and friends will increase new customers' trust in the product. Therefore, it is very popular in product systems that rely on acquaintances, such as fresh fruits and vegetables, fast-moving consumer goods, plastic surgery and beauty, parenting and baby care, education and training, automobiles, and photography.

2. The development process of group buying

In the early days, group buying started with fruit, and then expanded to fresh products, because products like fruit and fresh products are most afraid of being unsalable.

Therefore, when fresh food and fruit products are put on the shelves for group buying at lower prices, they rely on the endorsement of acquaintances and the network of acquaintances to acquire new users at a lower cost, while also effectively reducing the loss of fresh food and daily necessities and reducing inventory.

The early group buying method was centered around group consumption. Through WeChat groups, we conduct group buying activities, bringing together people with common needs such as people in the same community or relatives and friends, and then deliver the goods according to the order after payment via WeChat.

The light operation model and easy scalable replication are the important reasons why group buying has spread rapidly and is favored by major giants.

3. Why is group buying so popular among users?

The overload of product information, increased user selection costs, and significantly increased brand customer acquisition costs have made the path of traditional e-commerce increasingly narrow. However, with the help of diversified social operation models such as group buying, distribution, and communities, traffic can be fissioned more quickly.

Group buying actually takes advantage of consumers' price perception and increases the proportion of impulse consumption. There are three types of price perceptions among consumers:

• Product recognition. This means that everyone is very familiar with the products in a certain field and understands the corresponding prices of each product. Therefore, in some promotional activities, the price of single-item perception products is the most sensitive to users. Most of the so-called hot-selling products are of this type.
• Brand awareness. The most commonly used game for this type of gameplay is Three Squirrels. We often see activities with a price range of 399-199 on Three Squirrels. Faced with this kind of promotion, many people can't help but take a look at the specific circumstances. For users, they care more about fluctuations in brand prices.
• Category awareness. This is the form that Pinduoduo often uses. Most of the products on Pinduoduo's shelves are common daily items, such as a knife for 100 yuan and a towel for 30 yuan. Conventional promotions have limited impact on the overall sales volume, but once the promotion intensity far exceeds the normal price fluctuation range, sales will skyrocket.

Let's take a simple operation node as an example to give you a brief analysis:

1. Tmall Juhuasuan: Using sensitive price fluctuation ranges to quickly attract new customers
2. JD Super Brand Day: Leveraging brand appeal to activate potential users through discount promotions
3. Pinduoduo group buying: directly penetrate users' perception of category prices and remove consumption barriers

This is precisely the use of the price perception characteristics of each product to carry out differentiated competition.

4. Four development models of group buying

The current market group buying models can be mainly divided into four types:

1. Pure group buying e-commerce model represented by Pinduoduo. That is, there is only one group buying mode in the APP, and the social gameplay is extended around the group buying.
2. Traditional e-commerce platforms represented by Taobao, JD.com, Mogujie, etc. The group buying mode is one of the ways to play in the APP.
3. Third-party store providers represented by Youzan, Weidian, etc. Provide merchants with stores based on the WeChat ecosystem, where they can spontaneously engage in group buying to help promote their own stores.
4. Third-party marketing platforms represented by Renrenxiu. Provide users with functional plug-ins including group buying, bargaining and other marketing methods, through which users can quickly launch group buying activities.

As can be seen from the above, with the development of mobile Internet, the group buying method has gradually extended from a single group shopping platform such as Pinduoduo to various major platforms, including catering, shopping, entertainment, tourism and other aspects. In addition, many products have begun to use the group buying function provided by third-party marketing platforms to initiate activities on WeChat on their own and quickly acquire customers from WeChat's huge traffic.

Currently, the overall quality of Pinduoduo is being upgraded, and some group buying methods have new plans. Taobao, JD.com and other platforms, relying on the huge traffic of their own platforms, also hope to contain Pinduoduo and other group buying platforms through group buying methods. However, the group buying product strategies of Taobao, JD.com and other platforms are different from Pinduoduo's mainstream low-unit-price, super-high cost-effective product strategy, and the online product SKUs are not divided according to categories, so the overall effect is limited.

Currently, the more popular service providers for group buying services are Youzan and Renrenxiu. Youzan is suitable for small and medium-sized enterprise platforms. It is not worth the effort to open a store on Taobao and JD.com, so you can choose to open a store in Youzan. Renrenxiu is suitable for unconventional corporate products, such as educational courses, hot new products, coupons, etc. Merchants can promote them spontaneously on their own WeChat public accounts/WeChat communities based on the product functions of group buying.

5. Three common group buying pricing models

1. Hot sale direct discount type

The direct-price drop type of hot-selling products corresponds to single-item recognition products, because many of them are daily necessities, and users are most sensitive to the prices of daily necessities.

For example: if the price of a baby safety seat drops from 1,500 to 1,300, many users may not feel the difference obviously. However, if the price of a bottle of Coke drops from 2.5 to 2.2, many people will feel it deeply.

Therefore, the core function of the hot-selling group buying method is to attract new customers. By taking advantage of the price sensitivity of daily necessities, the products can be quickly popularized at low prices to attract users' active analysis and achieve the effect of attracting new customers.

2. Brand discount type

This is the most popular form at present. Brands can more easily stimulate potential users to consume through their own discounts. This is the fundamental reason why discount activities have become more and more frequent in the past one or two years.

So for the brand, what needs to be guaranteed is the quality of the discounted products, including a series of subsequent issues such as new products, inventory, etc.

3. Price Piercing

Category-aware products were originally the least suitable for group buying because of their low price sensitivity. However, due to Pinduoduo's previous 0 yuan flash sales, it successfully activated this market.

9.9 free shipping? 4.9 yuan free shipping? 1.9 yuan free shipping? Can these pricing strategies that are almost losing money touch your heart?

This strategy is to set prices that directly break through the user's psychological bottom line, giving users the illusion that the prices are too low to be believed. This can serve as a cover for low-price promotions and attract new customers, killing two birds with one stone.

Low prices are bound to be unsustainable. The consequence of low prices is that quality cannot be controlled. As prices return to their original range, how to maintain a balance between price and sales is also a big problem.

6. Difficulties and innovations in the development of the group buying model

1. Quality and quality control become constraints on development

The biggest challenge currently facing group buying is the instability of quality. Because group buying has low price requirements, merchants have to deal with defective products, such as small rotten fruits, in order to maintain gross profit. Fruit farmers, warehouses and consumers are located in scattered areas, lacking systematic management and unable to guarantee product quality. At the same time, the uncertainty of delivery time will greatly reduce the user experience

2. Innovation and improvement of group buying model

Judging from Pinduoduo’s current product types and strategies, consumers with irrational and non-rigid demands currently account for a considerable proportion, and the unit prices of group-buying products are generally low. But as time goes by, people are becoming more and more clear about the group buying routines.

It is particularly important to continue to evolve new gameplay based on group buying. New ways of playing such as “free bill for group leader”, “random free bill for group”, “1 yuan lottery group”, etc. need to be constantly updated and iterated. In addition, in order to maintain long-term development, it is necessary to expand low-profit categories to other high-profit categories, such as furniture and small appliances.

As the cost of acquiring customers for traditional e-commerce continues to rise, the advantage of social e-commerce in quickly reaching consumers through group buying and fission is becoming increasingly prominent. However, whether it can rely on its own core advantage of quickly acquiring customers will be the key to future sustainable development. When more businesses gain a huge number of users and retain them through group buying, how to open up a wider market from some middle- and low-spending groups is a question worth considering.

Related reading:

1. E-commerce operations: 3 viewpoints, let’s talk about online/offline traffic thinking!

2. E-commerce operations: 6 tips to teach you how to make e-commerce materials!

3. E-commerce operation plan: entry-level e-commerce operation plan from 0 to 1!

4. E-commerce operation: Social marketing product planning for e-commerce promotion (with practical cases from large companies)

5. E-commerce operation: 2 ways to play social e-commerce

Author: Renrenxiu

Source: Renrenxiu