Group Buying

Name: Liu Sin Yuk
Student number: 114115
ENG211.012

Cause and effect essay on group buying

What is group buying? This was a new term to people a decade ago. It means that sellers offer products and services with discount providing a minimum number of buyers would make the purchase. Group buying originated in China, and becomes so popular in the world in these several years. There are more and more group buying websites all over the world. In Hong Kong, there are also many group buying websites, such as Groupon, GroupBuya and Groupbuyer. The reasons for the popularization of group buying and the effects brought would be in the following parts.

Why does group buying gain popularity in these years? One of the reasons may be the technology development. In these several years there are great improvements in the electronic devices, the internet connection and the software. People can surf the net with their phones, tablet computers, notebook computers and desk-top computers. Together with the wide coverage of Wi-Fi, people can access the internet anytime everywhere. Besides, the software improves a lot too. There are many programs for commercial uses and software for compiling webpages available in the internet and their operations are very easy and convenient. People can easily make a website by themselves and start a business in the internet. The internet provides a platform for people to trade with others; the development of the electronic devices increase the ease and time people spend on surfing nets; and the software makes operating and online shop much easier than in the past. These developments in technology promote the appearance of group buying.

Besides, the merchants can advertise their products and services, to expand their markets and to increase their market shares through attracting more new customers by group buying. People who do not know or use the products and services of sellers before may be attracted by the discounts provided for the merchandises and be more willing to try the merchandises and services which are much cheaper during the discount period as they would have a feeling of taking advantages of the merchants. Also the premise of minimum number of people purchasing the offers assures the merchants that they would not suffer any loss since if there are not as much customers buying the offers as they required, they do not need to provide the discounts. By group buying, the sellers can promote their products and services, and gain more customers without suffering any loss, resulting in the increase of popularity of group buying among the merchants as a way to promote products and expand markets.

Moreover, the needs of customers encourage the development of group buying. People may want to purchase a product or service, but feel hesitated as it is too expansive. If they purchase a large quantity of products or services, the seller would be more willing to offer a discount. So probably they will try to gather people who are also interested in buying the product or service, and get a discount from the seller. This kind of shopping mode is known as tuángòu in China, and gradually spread and become popular among the world.

What are the effects resulted from the popularization of group buying? One significant change will be the impact on the traditional retailer shops. When group buying or online shopping were not that popular, people usually spend a lot of time visiting different shops and comparing the price of products they want to buy. But now people would firstly visit the websites of online shops or group buying and try to see if they offer the products they want. Since the online shops or group buying greatly reduce the costs of products, such as the utilities or the selling costs, the costs added to the merchandises can be greatly reduced, and hence the merchants can set a much lower price than those traditional shops. For the traditional shops, they need to spend a large sum of money as operating costs and costs of products hence greatly increase. Their products must be more expansive than those of online shops. The traditional retailer shops may have a decrease in their revenue and some may not be able to survive in such unfavorable situation.

Shopping online, customers may be less sensible of the amount of money they have used, and this may lead to personal financial crisis. Since the products and services are offered at much lower and attractive price than usual, people may have a feeling of taking advantage, and may purchase the products or services without thinking twice of whether they really need them. The easiness and convenience of online banking and payment further promote the purchase. By clicking a few buttons or typing a few words, the purchase process can be done. Unlike what people do during the payment process, they do not need to take out the wallet and pay cash or give out their credit card when shopping online. They may be less aware of the sum of money they used.

Crime may be resulted from group buying too. For online shopping or group buying, the customers have little or no idea about the merchants or the quality of the products or services. They may be cheated by the information provided by the merchants and purchase products or services which are of poor quality or unmatched to the information. Another possibility is that the owners of the group buying websites or the merchants do not complete their commitments and disappear after the customers have paid the money.

The advance of technology and the needs of merchants and customers promote the development of group buying. This is a new different way to shopping. However, people should bear in mind that they would suffer risks during group buying. Also, this new kind of shopping mode affects the traditional retailer shops greatly.

(965 words)

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[ 1 ]. Group Buying (n.d.). Retrieved Nov 2,2012 from the Wikipedia: http://en.wikipedia.org/wiki/Group_buying
[ 2 ]. Group Buying (n.d.). Retrieved Nov 2,2012 from the Wikipedia: http://en.wikipedia.org/wiki/Group_buying