Growth of group buying

As an industry in the early stage of its lifecycle, I believe that mobile and social media technologies need to be far more integrated into the offering before the international retail trend called group buying becomes a mainstream activity in South Africa. Eventually, only a few services will stand out as reliable, trustworthy and innovative.

Consolidation has begun, with one of the first group buying services in the country recently being bought out, but beyond outright takeovers, the social and mobile aspects of our collective connectedness have yet to be fully exploited by most of the local players.

With South Africa's relatively high penetration of Facebook and widespread use of mobile phones, including more multifunctional smartphones, the country is relatively well positioned to increasingly socialize group buying, something that will benefit businesses and consumers.

Email offers one-way deal

To date, group buying services in South Africa have relied heavily upon email to communicate with subscribers. This 'old school' method of communication is mainly one-way, offering a deal and a call-to-action from consumers. This yes or no dynamic is premised very much on the appeal of the deal rather than a relationship being developed with the consumer and among their network of friends, family and contacts. Comparably inexpensive, but far more interactive and insightful, there are a number of social applications that can deliver similar deals, but in such a way that they are sourced from the audience at which they are directed.

Facebook nation

For example, South Africa has almost 4 million users of Facebook (#2 in Africa behind Egypt), up almost 10% since last year. On average, local online consumers in the country log-on to this platform daily, sharing their opinions on various brands, experiences and topical issues. Group buying services have a ripe opportunity to tap into this massive (and growing) group of consumers to hear what kind of deals consumers would like to see, as well as receive feedback on deals already offered.

For businesses, socialised group buying facilitates online conversation in a neutral environment about a product or service; something that is far more valuable than mass marketing alone. Establishing online community is essential in adding credibility to the merchant/consumer relationship. For example, according to a recent report from Gardner research, social and mobile marketing will influence at least 80% of consumers' discretionary spending. In the words of the study's author: "Today, activity on the Internet has shifted back to its roots in interaction and participation."

Starting to tap in

With more than 120 000 likes on Facebook, across various city-specific community pages, my company is an upstart group buying service with a massive audience of consumers with exceptional local knowledge to share. Currently focused on the Cape Town market, it is poised to tap into the socialisation of group buying. Add to this the growing prevalence of mobile phones with Android, Blackberry and iPhone operating systems and far more transactional opportunities among communities of like-minded individuals begin to be possible. The proverbial 'value add' of this arrangement is that the communities source and endorse deals, putting the control of what is cool, new and appealing in the hands of consumers.

In the very near future, look for Group Buying 2.0 to take hold. Until then, shop wisely and trust your friends.