Group Buying For Business: Advantages and Disadvantages

Group buying business advantages disadvantages
Group buying websites and applications, such as Groupon and
Living Social to name but a few, have taking the consumer landscape by storm,
by offering location based discounts and special promotions from a variety of
businesses. These sites may be highly beneficial for the consumer, but what do
they mean for businesses?
The Advantages of
Group Buying

Group buying is, above all else, a very useful marketing
tool, as it promotes brand awareness in a focused fashion to a large audience.
Geo-targeting consumers aids not only in promoting your business but in gaining
loyal and repeat customers.
If your business is already established, the marketing power
of group buying can be used to launch and promote new services and products.
And the best part is, all the vouchers purchased through
these sites and apps are prepaid, and run for a limited time, meaning businesses
receive a lump sum for products and services sold via the sites.
The Disadvantages of
Group Buying

Group buying is not something that will benefit all
businesses. Those who don’t usually sell directly to the consumer may not
benefit from the marketing benefits offered.
Unfortunately, although these sites help promote brand
awareness and sales, because you are reducing the price of the product or
service you may find your profits are hindered initially. When planning to use
group buying, financially plan for it as a marketing expense, rather than an
income strategy.
Although group buying is undertaken to draw in new custom,
beware that regular and loyal customers may find and purchase multiple
vouchers. And the new customers will still need something to draw them back
other than further vouchers in order to turn them into repeat customers.
Beware that group buying sites often result in an influx of
traffic and custom, so make sure your business is prepared, as if your customer
service fails, the venture will not have been a worthwhile investment and your
reputation could end up damaged.
Group buying can benefit your business on a large scale, but
only if it is right for your business and you are equally prepared. Be sure you
know what you are getting into before you take the leap, and ensure you’re
company is able to take losses, as they are a probability.
Are you a business
who actively participates in or has previous used group buying? How did it work
out for you? Share your story and thoughts!