An ancestor of mine was one of the Founder members of Sauchie Co-Operative society. I must have some of that pioneering spirit in myblood for I am always interested to hear of new ventures springing up in this field. Nowadays the trendy term of Collaborative Consumption is the label used, but the idea is broadly the same - people work together to either keep costs down or to share profits across all steps of the production and sale process. Here is an interesting article I was sent concerning Group Buying:
Business Blueprint: group buying club
This week I want to talk to you about a booming business opportunity that doesn't involve much more than sending emails, will be a hit with both your customers AND your suppliers, and could make you an excellent income too.
It's a very new phenomenon that's come from the USA. It's become very popular, very fast. It's thriving as a result of the recession and of the phenomenal growth in social media marketing right now.
It's called group buying.
If you've not heard of it before, group buying is a simple but clever idea. It allows people who only want to buy one of an item to club together with others, and benefit from the kind of wholesale discounts you can usually only get if you buy, say, a hundred.
Here's how group buying services work: They go to suppliers and say something along the lines of .... If we can get you (say) 1,000 orders for your product or service, what's the lowest price you will give us?
Next, the group buying services email their members and make them a reverse offer. They say something like .... If we could get you a gym membership for (say) half the usual price would you be interested in buying it?
If you like, group buying is a kind of organised 'clubbing together' service where everyone benefits from the much larger buying power of a group.
Like I said, this is proving really popular right now as consumers are desperate to save money in a recession. There are already several group buying services and networks. Such as Groupon, Incahoot and even Facebook Deals. And, from what I can see, masses of potential for more to start.
You see, I don't think it would be that difficult to set up a simple group buying service yourself. But the money making potential could be very impressive indeed.
Here are a few thoughts on how it might work ....
* Choose a product or service to offer as a group buy. Current group buys are often for luxuries like beauty treatments and restaurant meals. But I think it would work even better by offering group buys for more mundane products and services.
It could be food shopping. It could be clothes. It could be toys, particularly at Christmas. It could be electronics or home appliances. It could be package holidays. Or even cars.
For example, I found what I think is a really promising group buying scheme which has been set up in the Netherlands. It called Met De Stroom Me. Basically their idea is to sign up 10,000 people who want cheaper gas and electricity. Then go to the main energy suppliers to cut the best deal. With gas and electricity prices set to rocket this winter (yet again) this could be a really great opportunity to try here.
* Next you need to get a group together. Advertise your group buy as widely as possible. And this is another clever thing about group buying schemes. They're tapping into the current boom in social media by using things like blogging, Facebook and Twitter to spread the word about their deals almost for FREE.
To make things even easier try and lock into existing groups. For example, you could tailor make deals for people who work for the same company, or parents who have kids at the same school, or students at a particular college, or members of certain clubs and societies. Then invite them to join your list.
All people have to do is sign up to your email list to say that, in principal, they're interested in buying whatever it is at a discount.
* When you've got a decent membership list together go to a selection of suppliers. Of groceries, clothing, cars, travel, utilities, appliances or whatever it is. And say something along the lines of this .... If we buy 100/500/1,000 units of this item what's the very best deal you can give us?
It depends on what's involved of course. But group buying schemes typically get discounts of 10-90% for their members. (Right now, you can see that 20% off a holiday, 10% off food shopping or 30% off a laptop or whatever it is would have members keen to join your list.)
* Once you've agreed a deal simply email your membership list and make the offer. Assuming you get the 100/500/1,000 orders you need simply pass the order to your suppliers. They do the work in delivering the goods and so on which makes this a really 'hands off' opportunity.
NB. This is an important thing about group buying. For the deal to go ahead a minimum number of members have to agree to buy to get the discount offered. Nobody is actually obligated to buy so if not enough members want the product or service the group buy doesn't go ahead.
So how would you turn a profit from running the group buying scheme?
Well, add a small margin to the price the supplier charges each buyer. It wouldn't need to be much. For example, if you added a margin of just 5% your buyers would still get a great deal. But on a £500,000 overall order (not much if a few thousand people take it up) you make £25,000 from each and every group buy!
What I really like about this is that it's a win-win-win situation for everybody. Your customers get money off - that's a perfect service for right now. Your suppliers get more orders - at a time when most companies are desperate for more business. You make a good commission from providing a good service to both of them.
And here's something I like even more about group buying as a business model: You can keep expanding your membership list by pulling in new buyers. And keep negotiating more and better group buys for them regularly, perhaps every week or several times a week. You can keep earning a commission on the deals you set up on and on into the future. And build up a mailing list of eager, responsive buyers that could be worth a small fortune in its own right.
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