Ronnie05's Blog

Future of Local Commerce: Collective buying (Part I)

Posted in Industry updates by Manas Ganguly on March 18, 2011

A few months back, Groupon made news because of a Google take over attempt for $6 billion. Groupon has stayed in limelight ever since. However, what has also emerged is the emergence of collective buying as a trend either in its original form or in different guises. This post examines the emergence of collective buying as a trend with lot of future potent.

Collective Buying Power with huge base discounts can only be redeemed if a certain number of people agree to buy the deal together.
U.S. consumer spending on deal-a-day offers could grow from $873 million in 2010 to $3.9 billion in 2015, according to a recent forecast by BIA/Kelsey. That represents a 35.1 percent compound annual growth rate.The market could reach $6.1 billion by 2015 — a 47.4 percent CAGR. The most conservative scenario, BIA/Kelsey estimated, would be a 19.7 percent CAGR, resulting in a $2.1 billion market by 2015

Web-based local deals is a market that startups such as Groupon and LivingSocial have blown right open by cold-calling and visiting local businesses to get them to mark down goods and services for the sake of bumps in volume. Collective buying rides the current wave of social networking to Facebook, Google, Yahoo and others are looking to join the fray. For merchants, it’s a chance to fill empty tables or bring in customers during historically slow times. Local businesses have never really had a simple way to manage their perishable inventory, especially labor and food. Why waste those resources during slow periods when you can bring savings-savvy consumers through the doors with a highly targeted local deal?For users, obviously, it’s a chance to get more deals, with the added convenience of location and the added urgency of an expiration hour, not just date.

The second part of this post will be about the various players who feature in collective buying.

%d bloggers like this: