Abstract
Online group buying has emerged as a new bargaining power for many shoppers and become more so as a result of increasingly growing popularity of social networking and community-based web sites. Aside from significant quantity discounts, these buying groups can also potentially influence the manufacturers and retailers on policies, product characteristics, and services. We propose an Online Group Buying Decision Framework to model the overall process of online group buying. We use a major group buying community web site in Taiwan, ihergo.com, to test our framework and conduct follow-up analysis. Based on the proposed framework, we design a survey study in an attempt to gain more insights on group buying communities, their activities, and culture within these communities. We then perform a path analysis, a special technique of structural equation modeling (SEM), to study the relationship among the factors used in the survey. Our findings provide useful advice for online group buying sites to attract customers and increase sales.
Highlights
E-commerce has emerged since the late 1990’s
We propose an Online Group Buying Decision Framework to model the OGB process
Majority of members purchase once at least 2-3 weeks. This clear picture of the member structure and buying behavior in online group buying communities offers a great guidance for retailers to fine tune their selling policy and adjust their product lines for the OGB communities
Summary
E-commerce has emerged since the late 1990’s. It continues to grow at a fast pace and becomes the dominant shopping means for most shoppers today. Online Group Buying (OGB) is one of such sub-category It is a mechanism where shoppers of similar products form online communities and use the power of their ordering quantity to negotiate prices with sellers. Similar to other e-commerce websites, many OGB sites started in the later part of 1990’s, for example, MobShop and Mercata Many such sites, ceased to exist only several years after their inception, due to reasons such as fast expansion (cash burning rate), improper operation, and fierce competitiveness. According to a research report by the Institute for Information Industry (http://www.iii.org.tw/), Taiwan’s e-Commerce total transaction amount is expected to grow between 10% and 15% annually from 2017-2022 This represents about 4.8% of its overall retailing market. We believe our contribution to the literature will help future research in more accurately identifying strategies to better capture market opportunities in group buying settings
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