Group buying has created enormous buzz in business
circles over the past 12 months,
but a solid plan before entry
is essential to success.

The first question a business manager needs to ask before they dive into the exciting but fast-moving waters of group buying is “why”, says Morris Bryant, founder of daily deals aggregator website The Dealer.

“People can get caught up in it because it seems to be what everyone in Australia is doing right now,” he says. “But to ensure success, you need to know exactly why you’re going into it.

“This is an opportunity to acquire customers, for instance. It’s not about immediate success or massive profit; it’s just about volume. So, if that’s the case, how exactly are you going to capture customer data and utilise that to ensure there is the greatest chance of retention?”

The opportunities offered by group buying are many, says Bryant. “The platform offers immediate, vast and targeted access to a customer base that is likely far bigger than the one most businesses already have, so it gets their brand out there in front of an entirely new market,” he explains.

Even better is the fact that the potential customers have already been pre-screened according to location and interests, meaning the offers that go out to them are geo-specific as well as niche-specific.

“A lot of business owners don’t know how to get their hands on such a perfect list but it’s all been done for them already,” says Bryant. “Still, they need to be well prepared when the customers come knocking at their door.”

Checklist for group buying

Bryant advises the following steps to ensure the greatest chance of success in group buying in Australia.

Why?

What are your reasons for entering the group buying sphere? If it’s a revenue driver, you need to know the exact cost of each customer. If it’s to increase your customer base, you need a plan to capture and utilise their data to create an incentive to stay.

Can you handle it?

Do you have the available stock in case the offer is extremely popular? And do you have enough staff and a robust and scalable delivery mechanism in order to satisfy so many orders?

Retention plan

What is your strategy to retain as many of those new customers as possible, especially considering that they are price driven and not likely to be loyal to a specific brand?

Are you with the right partner?

According to independent technology analyst Telsyte, the top five Australian group buying sites in terms of market share are: livingsocial, Scoopon, GROUPON, Spreets and cudo. Shop around and find a partner you’re comfortable with. Come to the right terms in the agreement and request data about customers. Then stand back, be firm in negotiations and make informed decisions. Don’t be swayed by salespeople but instead stick to the all-important reason for your entry into the market and use this reason to guide your decisions. It’s often best to test the waters by capping the offer at a certain number of products that you are comfortable with supplying.

The views expressed in this article are those of the author and the interviewees, and not of Australia Post.

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