Tuangou, Hot Social Commerce Trend from China: GroupBuy + FlashMob = Fun

It works like this.  You want to buy something from a local store – a car, a luxury fashion item, gadget or gizmo.  So you tap your social and local networks online for others wanting the same thing and you organize a flash-mob; you agree to turn up at the poor unsuspecting store en-masse at a particular time and demand a group discount; and you get it – the store manager trades margin for volume and makes the sell, and you walk out of the store with your discounted purchase.

That’s Tuángòu (pronounced twangoo), the fast growing social commerce trend of team-buying in China that fuses online collaboration with high street retail (see here, here, here, here, here, here, here and here for overviews and background of the Tuángòu phenomenon (podcast directly below and Economist article at the end of the post)).

And it’s fun – check out this video of a Tuángòu going down China-style.

So here’s the question – in the West, have we lost the Wild West appeal of the Tuángòu?

Sure, Group Buy sites such as Groupon, BuyWithMe and MyCityDeal offer location-based group discounts. But it’s rather sterile – you pay for a coupon for a pre-defined deal with a retailer from the Group Buy site – and then exchange your voucher  in-store (or online) for goods – usually worth twice as much (or more) of the price paid for the coupon. It’s all very civilized – except perhaps the part where the intermediary/broker site keeps 50% of income for coupons…

Twongo, one of a myriad of new location-based Group Buy sites popping up; it has the etymological nod to its Chinese roots, but is it missing a trick?

So perhaps there’s an opportunity to inject some fun back into the Western style version of the Tuángòu – with a shopper-led feature that harnesses location-based mobile technology to help people set up Flash Mobs at local stores (aka Store Mobbing) and get discounts live, and in person.

Imagine, for instance, a Tuángòu-enhanced FourSquare, Yelp, Bright Kite, Loopt or any of the other location-based social networking services?  Or even a Tuángòu forum feature on the new Groupon iPhone app – that would allow shoppers to self-organize and hot stores en-masse whilst out on the town.

Or what about a Tuángòu plugin for user forums – it took a blogger in China just 2 weeks to find 54 other people from Xcar BBS to organize a Tuángòu purchase with a Toyota dealer to purchase a total of 55 Toyota Yaris cars at a 30,000 RMB discount (specialist sites such as Liba and Qeeka (combined revenue > $150M) have emerged to facilitate Tuángòus in China).  Surely, there’s an opportunity for an out-of-the box widget for facilitating this.

Could the new SyncFu Group Buy widget for retailers (cutting out the intermediary) be adapted for forum-led Tuángòus?

Or how about a really radical idea – Tuángòu features on brand sites or their social network pages – allowing fans and followers to self-organize by location and hit retail stores en-masse and get discounts on their favorite brand.

As this recent academic paper on the Tuángòu e-business model noted (and see presentation below), US-style Tuángòu sites have traditionally struggled (Mercata.com, MobShop and LetsBuyIt.com all headed to the dead-pool in 2001 – and the more recent Facebook-based Twangu.com is currently offline (see promo video below); could the visceral appeal and immediacy of a real-world Tuangou add some location-based social fun into the Group Buy model?

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Twangu.com, currently offline, is a Facebook app for all-clicks, no mortar Twangou-ing…

Archived Article on Tuángòu from the Economist

Shop affronts

Consumer power

Jun 29th 2006 | GUANGZHOU From The Economist print edition

Chinese consumers are ganging up on their retailers

ON AN otherwise quiet Friday afternoon in Guangzhou, a city in southern China, 500 shoppers gather outside a Gome electrical superstore in the downtown district. They arrive en masse at the designated time—June 16th at 4pm—that they had previously agreed online. Several hours later, they emerge clutching boxes, having secured 10- 30% discounts on cameras, DVD players and flat-screen televisions. “It was great,” says Fairy Zhang. “We just bought an apartment and this way we can afford nice things for it.” The previous weekend, over 100 locals visited Meizhu Central, a well known furniture outlet, to haggle over the prices of kitchen cabinets and dining-room furniture.

Tuangou, or team buying, aims to drive unprecedented bargains by combining the reach of the internet with the power of the mob. It is spreading through China like wildfire. The practice originated in online chat-rooms but has quickly inspired several specialist websites, such as 51tuangou.com and www.teambuy.com.cn. Zhang Wei, who helped to set up teambuy less than six months ago, says the site has 10,000 registered members. The company plans to expand into Beijing and Shanghai.

The first team buyers found each other by accident as they chatted online about buying everything from electronics to cars and even apartments—and realised they could get a better price if they went shopping together. Getting a discount is also a sort of insurance policy against ending up with badly made or fake goods from Chinese shops. Some shoppers just show up at a store unannounced to see if they can bargain their way to a discount, says Chen Shu, a 32-year old from Shanghai: “Sometimes we call the shop, but often we just surprise them. Shopkeepers argue, but in the end they want the business.” Others are using websites like Ms Zhang’s, which work with shops to organise team-buying sessions where discounts are guaranteed without much confrontation.

Although some retailers dislike the practice—foreign luxury-goods groups like LVMH say they insist on fixed prices in China—others hope they can recover lost margins through the extra volume. The Gome store in Guangzhou, for example, closed its doors to normal customers when the team buyers showed up a fortnight ago and gave each of them a goody bag as they left.

Team buying turns haggling, a tradition in China, into an art-form. That such aggressive consumer behaviour has arisen in a country without much of a consumer economy and weak individual rights is less surprising than it might seem. In the countryside there are more and more organised protests against government corruption and dictatorial landlords, with even poor people using technology like the internet and mobile phones to help. Now their urban, middle-class brethren are adopting their tactics—if only for shopping. However, if China’s economy ever slumps, urban consumers could use their organisational skills to confront the government directly. Beijing might be watching the spread of team buying with trepidation.