Consumers are watching every penny in the current weak economy. Several new websites seek to capitalize on this bargain hunting, and they attempt to leverage the power of group purchasing. Individuals can band together on these sites in order to obtain deep discounts on everything from groceries to luxury vacation travel. Although there is not yet an official term for this phenomenon, industry insiders are terming it “crowd clout” or “community shopping”. LivingSocial and BuyWithMe are prominent examples of players within this niche, but GroupOn has already emerged as a leader in this space with over a million members located in 18 countries. GroupOn was able to achieve this scale via its recent acquisition of CityDeal which greatly expanded its reach.
Members of these sites receive daily emails advising of group buying opportunities. If enough members opt to purchase the offer, then all of them get the advertised deep discount. Alternatively, if the number of members electing to buy the item or service does not meet the stated threshold, then the offer is rescinded. This ensures that the advertiser sells the bulk amount justifying the greatly reduced price. Currently, most offers on this site focus on groceries, restaurants and local service businesses. Quite commonly, offers from local restaurants entail over a 50% discount. Many analysts assert that current cautious buying habits will stay with consumers even after the current recession recedes — which is good news for sites like GroupOn. Membership to many of these sites is free — so you have nothing to lose by checking out local offers in your area.