Group buying websites allows business owners to take advantage of economies of scale by offering discounts on products/services to a high number of purchasers buying the same thing within a designated time frame.
There are two main group buying websites for business in the UK:
Having launched in December last year, Huddlebuy was the first UK B2B group buying website, set up by Per Larsen (ex-Apple), Chieu Cao (ex-Microsoft) and Saurav Chopra (ex-Deloite/Yahoo!). It’s a simple business model, offering discounts of up to 80 per cent. When buyers see a deal they are interested in, be it for a coffee machine or legal services, and a minimum number of subscribers have signed up, they can either buy direct from Huddlebuy or from the supplier depending on the nature of the offer. The latter can get complicated. You buy the product/service at full price on the supplier’s site and Huddlebuy then send you a cash rebate (the difference between the discounted and full price) within an agreed time period. Deals to date have included well known brands such as HTC, Three, Canon and TalkTalk Business. To receive offers from the group buying website, you simply sign up to the newsletter. The website itself is user friendly and contains a “request a deal” section giving users a degree of control over the deal content. Huddlebuy recently received angel funding of £350,000 from investors including Alex Chesterman, co-founder of LoveFilm and Zoopla, and business angels Sherry Coutu, Sean Park and Udayan Goyal. Expect some exciting and big things in the future from this group buying website.
Newly launched in June by Andries Smit, a chartered accountant with experience at PwC and Morgan Stanle, group buying website SME Discounts has a similar business model to Huddlebuy. Subscribers can receive between 40-90 per cent discounts if a minimum number of purchasers sign up for a deal. Against each deal provider, there is a list of comments from previous clients so you can check the credibility of the product/service on offer. As with Huddlebuy, there is no charge for businesses to issue a deal but the site will take a negotiated commission from sales. The group buying website aims to become an SME community hub where people can start and contribute to discussions relating to the SME sector through the blog and discussion forums. To date, the site has offered discounts on web design, business cards, copywriting services and business valuations.
In addition to these two group buying website, there are three B2B sites in the US, which may soon break into the UK market: Group Price, Office Arrow and Bizy, all of which operate a similar model to the UK sites.
Will group buying websites take off among B2Bs? It all depends on two things. The quality and consistency of the deals offered and the customer demand. As always, the power to make or break any new business concept lies with the consumer.
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