The five trends transforming group buying in Southeast Asia

The revival of group buying reflects tough economic times and highlights the quest for online services that save time and money. A decade ago, in the early days of China’s eCommerce revolution, e-tailers began launching group-buying platforms.

Most subsequently closed as Chinese netizens fell out of love with collective purchasing. In recent years, social shopping apps have reemerged combining alluring discounts with engaging experiences.

The trend towards more stimulating and rewarding group shopping has filtered into Southeast Asian markets. Locally based start-ups are aiming to compete with regional group buying apps by eCommerce mega-brands like Alibaba, JD.com and Pinduoduo.

During the pandemic, group buying has served several purposes. It enables shoppers to access and share the benefits of discounted products delivered directly to the home. As a proxy for the mall experience, it adds a social element to smartphone buying. Thirdly, it provides better online value than can be achieved by shopping solo.

Takeaway

• Group buying has become a social experience that brings families, friends and colleagues together online
• It combines the convenience of smartphone shopping with deeper discounts
• Smart technologies enable brands and group shopping apps to more effectively customize their bulk-buy promotions

In price-sensitive markets, online consumers tend to seek out the best price for each purchase. Widespread usage of price comparison apps and the rising popularity of discount online shopping festivals means that brand or product loyalty is rarely even a secondary consideration.

It is the cost that counts, whether netizens are seeking out home-use items, fresh produce, gadgets, fashions or even dining and spa experiences. This is where group buying can play a strategic role for brands.

Astutely priced and targeted group promotions offer the potential for repeat visits and purchases. However, unique, value-added incentives are usually required, such as time-limited member discounts, bespoke product bundles and digital coupons, vouchers and scratch cards.

Takeaway

• Competition to attract and retain value-conscious consumers will intensify
• Consumers across the demographic divide want to be engaged by more than just price discounting
• Building group purchasing loyalty cuts across segments, from youth fashions to mom-and-baby items, and dining deals to do-it-yourself materials

Perhaps the trickiest aspect of group promotions in 2021 will be tailoring each experience to make it relevant, appealing and affordable. Tracking technologies enable brands to curate unique product offerings and monitor both the first response and repeat take-up.

Beyond the tech drivers, group buying can also respond to consumers “going local” in their product purchases. For example, Pinduoduo in China launched Kuai Tuan Tuan, a service enabling residential neighbors to pool resources for buying daily items from local stores.

Meanwhile, in Jakarta, groups of women are using peer-to-peer technologies to build informal food networks. These social commerce groups offer shared access to foodstuffs at affordable prices from street stalls, urban farmers and home-cooked meal vendors.

Takeaway

• Collective responses to the economic effects of the pandemic will likely develop further in 2021
• Researching consumer networking activities in each market will help brands customize their product offerings
• Sourcing homegrown products raises the level of trust among consumers and contributes to supporting local communities during difficult times

Demand for group buying spans a broad range of product categories and consumers seek a distinctive value proposition for almost everything they buy online. A good example is the bulk purchase of items that incur a higher cost due to local tax rules or a perceived intrinsic luxury value. This may range from big-ticket items, like TVs and smartphones, to luxury delicacies and wines and spirits. In this sphere, the quest for value is moving from wholesalers and supermarkets to online apps.

In Malaysia, where wines and spirits are heavily taxed, groups are gathering to purchase larger quantities of items like whisky, gin and fine wines. This enables consumers to share the benefits of an appealing overall discount that substantially reduces the unit cost.

This can be an effective retail tactic during festival seasons, such as Christmas, Chinese New Year or Deepavali when such products are widely consumed or gifted.

Takeaway

• Higher priced bulk buying is a small, but growing market segment that requires precise targeting
• Consumers share resources to buy high-quality, brand-familiar products online at prices that cannot be beaten by supermarkets or wholesalers
• Repeat purchases may be irregular, infrequent or even seasonal

Consumers that are used to protecting their budgets through group shopping expect to be engaged with ever-more enticing opportunities. This means that bulk-purchase marketplaces need to constantly refresh their range of incentives and brands must adjust to delivering different types of discounts.

Attention-grabbing slogans are a vital feature. The home page of Indonesian social shopping site KitaBeli, for example, promises daily deals of “up to 90 percent off your favorite items”. The caveat is that to achieve these steep savings, consumers must respond to “time-limited” promotions. This, however, is not proving problematic, as many shoppers are experienced at securing flash sale flight ticket deals offered by Southeast Asia’s low-cost airlines.

A related trend is subscription buying. Consumers that are apprehensive about going out during the COVID-19 pandemic are taking time to research the best discount purchases available to them. Brands responded by offering subscription-style deals whereby shoppers secure favorable discounts on large purchases by paying either in advance or by committing to a monthly fee that reduces the upfront impact of the total cost.

Takeaway

• Group shoppers research the best deals available but are also highly responsive to limited edition and flash sale promotions
• Group buying and subscription-style purchasing appeals to consumers’ seeking price and value
• Brands and group sale apps that make alluring promises must be able to deliver on them, otherwise, shoppers will turn their attentions elsewhere