There is a new wave of social networking in China. It’s a phenomenon called tuangou, or team buying, where a group of shoppers joined together through social networks such as online BBS (bulletin board systems), chat rooms and other web forums to purchase the product they are interested. Once they gathered around 40 or more bargain hunters, they would appoint a captain to approach the retailers for an in-store haggling session. This may sound crazy here in US, but haggling is actually very popular in China.
So far, this tactic has proved to be very effective in forcing the retailers to drop their prices. “The final price was beyond my expectations,” said Ellen Liu who recently bought a purple Toyota Yaris after her team called “Shanghai Yaris” negotiated a 30,000 yuan discount with a local dealer for each of its 40 members wanting to purchase the car. “We were very surprised.”
A number of retailers have started to deal directly with group buyers while dozens of professional web sites have emerged. Retailers say they often feel they have no choice but join the bartering or lose business. Some retailers waits months just for an invitation to take part in an event.
Qeeka.com, one of the most influential web sites in China, negotiate prices on behalf of shoppers while guaranteeing quality products and customer service. They also offer companies valuable market research based upon the conversations consumers are having about products on their online forums. Often companies are forced to monitor websites like Qeeka.com if they wish to stay competitive with other retailers. “This is crucial to our company’s success,” said one business owner. “We don’t want to be left behind by this trend.”
Social networking has also been vital to the phenomenon’s success. According to 2008 figures from the China Internet Network Information Center (CNNIC), nearly 100 million Chinese netizens regularly visit online bulletin boards to share opinions, ask for help or socialize with friends.
Somehow this phenomenon has yet carried over to here in US. Several companies have tried to start group buying sites in America and Europe yet most of them failed due to a sheer lack of interest from consumers. Part of the reasons is that bargaining has been ingrained in the psyche of Chinese society for centuries. While in US, most shoppers are too polite or simply unheard of bargaining in stores. However with the exploding popularity of social networking and the backdrop of the financial downturn, some companies are starting to test whether Western consumers are ready to team up and bargain like the Chinese.
One work in progress is a Facebook application called Twangu, which allows buyers to build teams across friend networks for products they want to purchase. The company then recruits retailers to bid against each other to offer the groups the lowest price.
