Hong Kong– Groupon Hong Kong has partnered with Jiepang, a location-based service similar to Foursquare, and will offer local consumers Groupon deals via their smartphones. The arrangement is scheduled to kick off next month.
In China, Jiepang already has an alliance with Tuan800.com, a Chinese group buying aggregator that allows smartphone users to find the best deals based on their location, Jiepang CEO and founder David Liu said.
Danny Yeung, Groupon Hong Kong CEO, said his company is still in discussions with Jiepang on logistics of the partnership to either offer deals based on location or introduce “venue of the day” deals for mobile users in the city.
Since Groupon acquired local deal site uBuyiBuy in December 2010, the group-buying platform has teamed up with Web portals MSN Hong Kong and Sina Hong Kong, as well as local discussion forums Discuss.com.hk and Uwants.com to extend its service to members on the partner sites.
Yeung said Groupon Hong Kong now has more than 350,000 daily subscribers and over 181,000 fans on Facebook.
According to his LinkedIn/online profile, Yeung is involved in hiring employees in China and is looking for “smart entrepreneurs for management roles” in Shanghai, Beijing, Guangzhou and Shenzhen.
As Groupon continues to gain popularity among consumers, how will this collective buying behaviour impact brands?
Samson Choi, digital marketing director at CRM agency ICLP, explained that Groupon’s business model is based on reselling products or services at a fraction of their regular cost – usually below 50 percent of the listed price and with Groupon getting a cut of what’s left, it leaves a narrow margin for participating businesses.
Choi said Groupon users are mostly bargain hunters who would shift from one brand to another based on available discounts.
“As a result, individual customer value decreases; brand’s motivation to make them loyal customers decreases; and customer’s motivation to stick to a single brand also decreases,” he said.
Damien Cummings, global social media director for Dell, consumer & SMB agrees that in spite of abundant media coverage of Groupon and similar group buy services, “the problem is Groupon is great for Groupon but not so great for the companies selling products on Groupon”.
Group buying, which is sometimes lumped into “social commerce,” is not new for Dell. The company launched a global pilot of the strategy in Singapore in May 2009, originally called the Dell–Intel Swarm.
Since then, Dell has refined the idea and functionality and released a new version in Canada, but it has now ended the pilots in both markets. Meanwhile the company unveiled Dell Swarm Australia in November 2010.
Based on the success of the pilots, Cummings said Dell is considering launching Dell Swarm in its top 10 countries, which in Asia includes Australia, China, India and Japan.
However, unlike Twitter, which @Delloutlet uses as a social commerce channel to drive sales, Cummings pointed out Dell Swarm is more a marketing than a sales tool because it encourages awareness of a niche or less well-known product group, such as digital cameras, projectors or printers.
As no other brand has tried to develop a group buy or social commerce concept like this, Cummings said Dell had to innovate as it went along.
“We manage the products we sell and can focus on a limited number of “hero” products that might not otherwise get great media exposure, or work with partners who want to sell products to Dell’s extensive customer base,” he added.