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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!"
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.
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.
No one here disagrees that Tuangou is really a good idea. But due to the way market works, if this trend catches on nationwide, soon there will be a slowly increase in prices, so that the discount they ask for will result in the current prices of today. Buying outside a Tuangou will become quite more expensive and impracticable.
Please, correct me if I am wrong.
If I clone myself, can I call it a thread?
If a girl winks to us, can I call it a race condition?
Who wants to mob up on an NYC Apple store to see if they're give us a massive discount? Please leave stones at home since we don't want to break the glass house.
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 ?
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So, this capitalist lackey and his bourgeoisie imperialist masters walk into this bar looking to oppress the proletariat, see, and there's a frog on this one guy's head, see? And the bartender says, "Hey...what the heck is THAT?!" And the frog replies, "Well, it started as a wart on my ass..."
--Comrade Henny Youngman
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.
Where in the US do you pay "too much money for gas"?
when you are with 500 people, it's a fine line between negotiating and threatening to get a discount.
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.
Somewhere in the rubble of the ancient dot-com bubble, there's a company called Priceline which aimed to do the same thing virtually. If memoory serves their idea was to aggregate buyers and contact a merchant to see if they'd meet the desired price.
Dell releases coupons with staggering discounts, those coupons go to "deal" sites. "Smart mob" of buyers with coupon codes floods Dell's website and gets their 30-40% off. Regular Joes continue to buy at twice of what they could have paid.
At a gas station! Duh!
Haida Manga
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.
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