Group Buying enters the Trough of Disillusionment, will it recover?

Posted on by Billy Tucker

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Gartner describes the adoption of Technology (where there has been clear market Hype) using the Hype Cycle diagram. The same diagram can be usefully adapted to describe the current challenges facing the Group Buying industry given it was built on a platform of extraordinary hype and has since suffered its own decline. Also, much like how the Technology Hype Cycle describes the organic adoption of the technology over time once the Hype has dissipated and the useful nature of the innovation emerges, Collective Buying does add real value to Merchants and Consumers, and beyond the hype and the noise of Group Buying, that value add still exists – which then begs an interesting question, what is required to ensure an enduring future for Group Buying?

The key phases of the Gartner Hype Cycle are on the left of the table, an equivalent stage in the Group Buying evolution is on the right:

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I believe that to get through the Trough of Disillusionment and onto the Slope of Enlightenment, the players in the industry need to follow the 4 tenets of Effective Group Buying:

  1. Provide genuinely useful marketing services for Merchants, including valuable insights on their new customers and mechanisms to drive upsell and loyalty
  2. Minimise the promotion of irrelevant offers through investments in targeting technology
  3. Add Value to their members through genuine discounts on products and services
  4. Underwrite their offers with a suitable customer support policy and helpdesk

Huon Bush Retreat discovers the power of Facebook Offers, not sure they expected that response! (UPDATED)

Posted on by Billy Tucker

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Facebook has launched their Offers product to a limited number of Business Pages, at first glance it looks like Facebook and the current approach may be just too powerful for this small business marketplace. image

Maybe it’s the sharing mechanic, maybe it’s just the fact that Offers are new and attracting curious clicks, either way, I’m not sure Huon Bush Retreat (accommodation for up to 60 guests!) expected 120k new customers! (interesting to see how many actual customers they have gained) – fingers crossed they are not being drowned by calls right now.

No doubting the power of the Facebook fire-hose, hopefully they tame it before the product is released. I am curious to hear from someone at Huon Bush Retreat to hear what they think of the Facebook product.

Facebook offers are described here.

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As an update to the post above, I went back to the Huon Bush Retreat Facebook page to get a sense of the impact the Facebook Offer had, the results are concerning.

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The Good news is that lots of people are talking about Huon Bush retreat, according to Facebook, some 102k people are talking about the business, however, on the downside, you don’t have to look far to see what they are saying…

Sadly, the overwhelming sentiment is negative, through no fault of the Huon Bush Retreat. Their wall has been hijacked by unhappy Facebook members concerned that they are now being spammed by the Retreat.

Here’s a snapshot:

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I hope they make it through this promotion with their reputation intact.

Profiting from the fundamentals of Group Buying: part 3… Scarcity

Posted on by Billy Tucker

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A key tactic more often employed by Flash Sale sites than Group Buying sites is scarcity, but there is more to this tactic that meets the eye.image

Stock limitations can be a condition, i.e. we really only have 200 available in our warehouse, however setting a stock limit can be a very effective tactic to drive up sales, this is the Scarcity Game Mechanic. To set an appropriate limit, forecast the likely sell through of a particular item, then set a stock limit that is 10 – 15% higher than that forecast, the Scarcity Game Mechanic if played right will ensure the limit is reached and your forecast is exceeded. image

To illicit the right response, the shopper has to feel some sense of urgency due to the stress that comes from missing out, clearly this is less effective in the early phase of the sale but that’s ok given the forecast amount would have been reached on its own. Having a genuine countdown display is key, either literal or abstract, regardless though it has to be genuine, once the limit is reached the item is “Sold Out”, it’s tempting to find and release more stock however once this occurs, the scarcity mechanism will be discredited for good. imagePromoting the Stock Limit though display advertising or EDM is also good, however the level of promotion provided has to be proportionate to the Stock available. Lastly, if a Consumer comes to the site after the limit has been reached, this is a great time to reinforce the “don’t miss out next time, be first to know with our SMS program” or similar engagement/re-targeting program.