Group buying

Group buying, also known as collective buying, offers products and services at significantly reduced prices on the condition that a minimum number of buyers would make the purchase. Origins of group buying can be traced to China where it is known as Tuan Gou (Chinese: 团购) or team buying.

In recent times, group buying websites have emerged as a major player in online shopping business. Typically, these websites feature a "deal of the day", with the deal kicking in when a set number of people agree to buy the product or service. Buyers then print off a voucher to claim their discount at the retailer. Many of the group-buying sites work by negotiating deals with local merchants and promising to deliver a higher foot count in exchange for better prices.

In 2000, with financial backing from Microsoft, co-founder Paul Allen started an e-commerce start-up called Mercata with a business plan dubbed "We Commerce". The website offered high-end electronic deals to shoppers online. Individual web shoppers would sign up en-masse to buy the same product and the price of the product would fall as more people signed up to buy it. However, the website was shut down in 2001 as it could not compete with websites like Amazon.com.

Recently, group buying has been taken online in numerous forms, although group buys prior to 2009 usually referred to the grouping of industrial products for the wholesale market (especially in China). Modern day online group buys are a variation of the tuángòu buying that occurs in China. Under tuángòu, 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, group buys allow people to invite others to purchase in bulk jointly. These group buys, often result in better prices for individual buyers or ensure that a scarce or obscure item is available for sale. Group buys were, in the past, often organized by like-minded online shoppers through Internet forums. Now these shoppers have also started to leverage the group buying model for purposes of buying other consumer durables. Group buying sites are back in demand as small businesses look for ways to promote their products to budget-conscious consumers in a weak global economy. Group buying is also used for purchasing real estate properties. Real Estate Group Buying is very popular in India where websites like Group Bookings offers group deals on various properties.

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Wikipedia