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Smart Mob in China for Retailer Discount
taweili writes "The Economist has a story about Tuangou in China. Tuangou, roughly translated into group purchasing, is basically a smart mob who arrange the meet up over the internet and show up at a retailer at a specific time and use their number to negotiate a discount with the retailer. In the story, a Tuangou group of 500 show up in Gomei (largest home electronic retailer in China) at 4pm on June 16th and negotiate a 10 ~ 30% discount for the group. Gomei not only closed the door to the normal customers but also prepared goody bags for these Tuangou shoppers. Now, that's Power to the People!"
Sounds interesting but what if you don't get the discount you want? Or maybe the reatiler doesn't gove you a discount at all?
Potentially you just wasted a byunch of peoples time, and probably a lot of the people who showed up would buy without the discount anyways since they are already there cash in hand.
Of course that would be the last time that particular retailer was approached.
In the car tuning scene "group buys" have been commion for years, though they generally don't involve people personally showing up anywhere or have anywhere close to this scale.
Actually, "power to the mob" may be a better description. Mob based power has existed throughout history, and it usually has not been pretty. Furthermore, if you're an individual (in the true sense of the term) who does not enjoy associating with the mob, you tend to be screwed over by those who do. Food for thought.
Uttering logically derived and empirically supported truths to the disciples of the orthodox establishment.
but mob shopping is old news in brasil. usually it involves closelly related ppl, like a large familly or employees of the same company banding togheter to buy goods in bulk.
the most common itens are "back to school" goods, such as notepads, pens and stuff like that.
What ? Me, worry ?
If you got a couple hundred people to go down to your local Best Buy, they'd probably call the cops. Even if they didn't, the iron-fisted corporate policies of most retailers would probably preclude getting any kind of deal.
If you contacted the retailer and told them you could guarantee that 500 people would be willing to buy their product, then I am sure they would be happy, especially if you tell them you could go somewhere else. After all what is a small discount if you manage to sell 500 copies of the product. In the end it has all to do with the approach you take and the fact that a good business is in the business of making money, preferbly in a legal manner.
Jumpstart the tartan drive.
I don't know how big standardized retailers work in China; I only shopped at one in Xian when I was there. But everywhere else, you're expected to bargain like crazy if you want to buy almost anything. Price cuts of up to 7/8 aren't uncommon. It takes tourists a while to catch on (it took us several days, not having a local guide), but after a while you get in the habit of just saying, "No, I don't want that", until the price gets haggled down by 50% maybe twice, maybe three times. I'm not terribly surprised to see this happening on a larger scale.
Isn't it the case that when someone hears about a new mob that is going for discounts for stuff this person doesn't even need, (s)he is more likely to join just because of a perceived advantage? It is strange, on one hand people seem to be cheap, on the other hand I am sure many of them end up spending money on things they don't really need.
I buy very few things. My appartment has one bed, 3 chairs (a gift, I didn't buy those,) a notebook computer, an old filing cabinet (another gift,) a couple of kettles, a frying pan, a steaming pot, some drinking glasses, an oscilloscope, a 3 way power transformer, a digital CPU programmer, an unfinished 3D printer, a few small tools, a VEX robot set with some addons, some clothing, a vacuum cleaner and a few normal household appliences (washer/dryer/fridge/stove/microwave oven/dishwasher.) That is it. I probably should get a sofa, but I am reluctant, I am thinking about building my own table, I havea built in bar-table. I've been living this way for the past 3 years and I think I have a little too much stuff. A buying mob like this would not interest me unless I could get ridiculous discounts, like really ridiculous, like 90% off, and I don't buy cheap stuff (as strange as it sounds,) everything I do own is quite expensive and of good quality.
You can't handle the truth.
Yes, BestBuy tends to ignore their customers unless you come in for one very specific thing because you need it about an hour ago so you can't wait for delivery from an online retailer. In this case, you have blue shirts swarming around you trying to upsell you on everything.
The fact that I dress fairly nicely most of the time just seems to scream "comission" at them.
"I need it right now" is about the only reason I ever go there. The other reason is the occasional loss leader like burnable media priced cheaper than I can get it anywhere else.
Everything I need to know I learned by killing smart people and eating their brains.
I have a Costco card and a Sam's Club card already. I don't like Sam's club as much, since they have higher prices, lower quality, and more rednecks starting fist-fights in the parking lot.
This article is really about informal buying co-ops. Co-ops were and are a good idea, and are widely hated by "real" and "legitimate" businesses because they cut into profits. That means it's about time they make a big comeback, aided by the Internet as a way to "spread the word".
In fact, they did: http://www.improveverywhere.com/mission_view.php?m ission_id=57
Granted, they aren't trying to buy anything... but it's still humourous nonetheless to see management flipping out.
I think they changed the contents, but they used to have it all detailed in those flip book style things that they have next to some registers. I'm pretty sure they're meant for the cashier, but if it's sitting there you can flip through it.
It talks about their policy on just about everything, including returns w/out reciepts, what to do if a kid is lost in the store, etc etc etc.
But yea, Best Buy isn't going to have enough of any big-ticket item in stock to make it worth the hassle unless you get some employee to verify what's in-stock beforehand.
[Fuck Beta]
o0t!
I partly wonder what the hell you could buy that a retailer would have 500 of on hand. Or even 100. Food? The margins are already quite thin there; you can't negotiate a deal on that. Cars? Possibly. Electronics? That's what they were buying in story, mostly. My personal favorite: apartments? Only in China would you find that much free occupancy, and bargining is already built into the apartment rent game.
Instead, I suspect the real reason this wouldn't happen in the states is that the people who organize it would negotiate a volume discount and keep a bit of it for themselves. Sort of like what already happens with Sam's Club and Costco. I shudder to think what would happen if it did become acceptable in the US: astroturf groups paid for by retailers to solicit such group bargining.
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This sounds more like a case of Chinese mass hysteria and a spin on a very common scam used by confidence tricksters and indeed marketers everwhere. Ok you are a retailer, you get someone skilled in the art to arange for 500 people to "flashmob" your store then you sell them loads of crap at the usual discount you give to everyone else - oh just be chance you have a few goody bags on hand. If I was ordering in quantities of 500 I would expect big discounts.
It works because people are happy to part with money when they see their peers doing likewise and they hate to pass up a bargain.
Trust the Economist to be taken in by it - but then they believed in that Enron really was a new business model based on the lightweight economy.
Ahh yes, I remember buying a Palm IIIx organizer through Mobshop around 1998. It was as cheap as any other site, and if I could just get 7 friends to buy one, the price would drop an additional $3.74. They even offered to spam my friends for me. This of course is a recipe for having 7 fewer friends.
Mobshop were so pathetically grateful for my business they sent me Christmas cards and swag until they folded. Not a sustainable business model.
Before Amazon and eBay dominated, there were lots of alternative approaches to selling bulk lots of goods on the Internet; for example OnSale.com tried Dutch auctions, reverse auctions, etc. Slate has a good article on the economic theory behind it all.
The problem with such bulk schemes is everyone involved is gambling that somewhere in the supply chain there's a warehouse overstocked with goods, i.e. that distribution is inefficient. I think the real power of such auctions is only apparent when manufacturers sell direct. They reap the most benefit from economies of scale and tailoring production to demand. Imagine if Amazon was just a showroom for purchases built-to-order and shipped directly from the manufacturer. You'd buy an organizer through Amazon for $150 with a firm shipping date from the manufacturer, and a promise that if more people order before then, your price will go down. To motivate you further, Amazon could provide you a spiff code such that if family and friends bought more, you'd get a share in Amazon's slight commission.
ShowroomShipDirect, TailoredLeanProduction, and PSC (Personal Spiff Code) are all © skierpage, contact me for licensing.
=S
You can't negotiate cheaper prices for anything in a medium or large-sized store. In austrailia, can you pull something like that off in say, a McDonalds?
Actually, I do this all the time.
One of my hobbies is 4X4 Trucks (old Ford Broncos specifically). It is not uncommon at all for us to put together a "group buy" on something. Some inspired indavidual will contact a vendor for some product; a winch, wiring harness, tires, wheels, shocks, etc. and propose a "group buy"
The vendor will give us a critical mass quantity (usually around 10 or so) and offer a substantial discount (10%-30%). There is usually an email storm that then insues as news of the deal is circulated. If the quantity and deadline are met, the vendor ships the product to the individuals that participated in the offering
Smaller scale than "hundreds" of people, but I have gotten some pretty sweet deals doing this.
Yes, it works in the U.S.
But that's the same in almost an country you drive in. For example in Britain it was about 95p a liter of petrol the last time I drove there (about a year ago), but about 1.25 a liter at motorway service stations, or anywhere within a mile of a motorway exit.
The only place I've driven where that doesn't apply is Japan. Typically petrol prices here are cheapest in big cities and along major roads, getting more expensive as you get up into the mountains to compensate for the higher costs of transporting it there.
As for someone elses comments that US prices being less screwed than UK prices doesn't mean they're not too high - I think your fuel prices are too LOW! As long as you're paying so little for fuel, there's no incentive to buy more fuel efficient cars. It's not like you even need new technology like hybrids. The 10 year old Ford Escort (and yes, that's the american company Ford, but very different to the US version of the Escort) got better fuel efficiency than most american cars on the market now. That included 45mpg (37.5mpg in US gallons) on a regular 90mph motorway run, and better when I was less heavy footed.
If you had to pay 95p per litre ($6.63) for petrol in the US, you'd end up buying more efficient cars, driving the price of them down AND helping the environment! Aside from the initial expense of the changeover, which could have happened gradually if it hadn't been for the amount of protests about fuel prices, you'd end up paying the same price per mile and saving fuel.
Doesn't that sound like a good idea?
For reference, the current average petrol price in the US is $2.93 per US gallon (42p per litre!)
And I don't know about these days, but places like Coles & Woolies used to be open for organised shopping groups outside normal hours, with a 5 or 10% discount across the board.
Different story - McDonalds store margins are razor-thin - but it can be done. Ring 'em up and make a group booking.
(Aside: McDonalds really hate it when you bring in a big group without warning, particularly during a slow time. It plays merry hell with their predictive cooking system, which is the very thing that allows them to run with such tight margins. A couple of store owners have told me that when the system goes down, even the best human management means the store will only just beat break even until it's fixed...)
What part of "a well regulated militia" do you not understand?
You've mis-read it. One guy had bought a TV _for_ his new apartment. As in, he had just bought a home from somewhere else, and then discovered that he also needs a TV, furniture, etc. So he joined such a group and bought them at wholesale prices.
As for what you could buy in the USA that way, well, I don't know about the USA, but here in Germany most retailers have pretty large margins on anything. Just look on how much they can cut the prices periodically on some stuff, for no other reason than the doctrine that people coming to buy that will also buy something else.
In part that extra money goes on "shelf space" and the like. I.e., it costs you money in rent and salaries to keep something on the shelves or in the warehouse for months. You can also calculate a sort of a cost for slow selling products in money lost by not stocking something else that sells faster.
So I don't know if showing up unexpected would work, but if you called in advance only a complete PHB would refuse to give you a 10% wholesale discount on something that they marked up by 50%. It's a lot of profit in a burst, and if he's smart he'll realize that it's 100% profit. At that large size of an order you could have contacted the wholesaler directly instead, and bypassed the retailer completely. E.g., if you wanted to buy 100 kitchen furniture sets, like in the article, you could probably have contacted Ikea directly instead and taken it at their wholesale prices.
But at the very least it's stuff which:
A) otherwise would cost him shelf space for months or even sit on the shelf until it's outdated. Such a burst sale is pretty much as good as selling it directly from the truck.
B) otherwise would have been spread between him and all the competition. E.g., here if you wanted to buy a TV, you can go to Saturn, Media Markt, Pro Markt, or a dozen others, and that's not even counting the hundreds of online shops. Heck, you can get a TV from Aldi, which is mostly a cheap grocery store chain. So 500 people coming together to buy from, say, Saturn are better than 50 coming to Saturn and 450 going to buy from somewhere else, which is what would realistically happen otherwise. Selling at half the profit margin, but to 10 times more people, can be pretty good business. (After all, Aldi built a retail empire on that doctrine.)
Of course, I've never heard of people doing that here, but I have a strong suspicion that it would work if anyone tried.
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