Innovative “group buying” sites offering bargains on everything from meals to travel packages are catching on in Asia as companies harness the power of social media to influence consumer behaviour. International brands and local merchants alike are exploiting the business model, which offers attractive deals with a catch — they have to be purchased by a minimum number of consumers within a deadline.
The discount sites take out advertisements on Facebook and portals, send out Twitter messages and blast emails to their target market to promote particular deals. Consumers in turn ask family members and friends to take up an offer — so that they can eat in a group or relax in a spa together — and at the end of a successful promotion, discount sites get a cut from the vendors.
“It is basically about creating experience for the user,” said Patrick Linden, chief executive of Singapore site deal.com.sg, who said his sales hit SG$2 million (US$1.6 million) in February from just SG$20,000 in May 2010, its first month of operation. “Basically, social media powers our business,” said the 30-year-old German entrepreneur who claims to have more than 300,000 email subscribers notified regularly about offers. “The whole viral marketing is enabled through social media.” Financial services giant J.P. Morgan forecasts the Asia retail e-commerce market, excluding travel, to more than double from US$156 billion in 2010 to US$323 billion in 2013.