Social Commerce

The $100K Group-Buy Deal | Big Tickets Come to Group-Buy

LivingSocial, the Amazon-backed #2 group-buy site that takes 35% commission (as opposed to Groupon’s 50%), sold only 115 group discount coupons for it’s latest deal – not surprising considering it was for one night stay at a hotel for $10,000 (for four people) or $2,000 (for two).

What will be surprising to some is that group-buy is moving upscale, selling big ticket items very different to the low-cost impulse purchases of 1/2 pice local restaurants deals.

Designed no doubt to garner PR headlines, the advertiser, Fairmont Hotels (SF), has offered a $20k package for four at half price $10K or $2K for two people on the ‘Escapes’ travel section of LivingSocial. The package for four included a one night stay in the Penthouse Suite, a Four-Course En Suite Dinner for Four, Exclusive Tiffany’s China Set for Four, Monogrammed Robes to Keep, Bvlgari Amenities, Red-Carpet Welcome Package Valued at $500, and a Full Day’s Access to the Penthouse Maserati Quattroporte. Oh, excercise classes and a Fairmont Platinum Loyalty Card were included too – but not taxes and gratuity.

Big ticket items are not new to group-buy platforms, Mercedes sells cars on them, opticians (Foulkes) offering $4000 eye surgery on them (for $2000 – 237 purchases), and bike retailers offering $900 Dutch Oma Fiets bikes (for $499 – 40 purchased), but it’s a trend we think we’ll see more of as deal platforms (flash sales vs. group-buy) fight it out and consolidate.

But the deals will have to be compelling – several recent big ticket group-buy deals have fallen flat – a B2B group-buy offer for $25,000 consulting services for Ajilitee (for $12,500 – minimum not reached), and a travel agent (Ludos Tours) selling a $4950 PGA Masters Tour Package (for $2,475 – minimum not reached).

We’ll have to see whether the $15K off a $100K spaceflight from newly launched TripAlertz if 10+ people sign up, works and is anything more than a PR stunt.

As currently set up, group-buy platforms appear best adapted to sub $100 deals – but that means there could be an opportunity for new players to launch specialist group-buy platforms for high ticket items with a personalised service and information – offering personalised service (from  pre-purchase customer service to bespoke negotiated based on subscriber demand (e.g. 20 people wanting to buy (say) a Mercedes find each other on the site and a deal negotiator acts on their behalf to negotiate a deal).  In other words – a demand-led group-buy service.

Such a a demand-led premium group-buy service would be on our short list of big opportunities in the social commerce space.

Chartered psychologist specialising in consumer behaviour, wellbeing and technology. Certified CX professional experienced in Design Thinking. A researcher, writer and speaker, Paul is head of Digital Insight at SYZYGY.

2 Comments Add New Comment

  1. i have always advocated that the group buying sites should be offering discount on high ticket items to make money. Apart from cars, hotel stay etc, the latest entrant I have seen is real estate, which has been mastered by an Indian startup It helps people buy real estate in a group! which saves money for the customer and gives bulk sales to the builders.

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