We have already mentioned a few times that group-buying is one of the hottest trends in e-commerce in China in 2020.  Let us have a deeper dive into what it is exactly and how it can be of help for your brand.

Group buying, also known as social e-commerce,  is e-commerce driven by social interactions among friends and family. It may include sharing discounts, games, and other content to enhance the shopping experience. Group buying may give more flexibility to brands or marketplaces, it can be a great way to sell out the inventory and decreases customer acquisition prices significantly.

Group buying offers products and services at significantly reduced prices if consumers buy in large quantities which is quite appealing to consumers in three- and four-tier cities, whose lower income makes them much more price-sensitive and deal-oriented. They can join with family, friends or even neighbors to take advantage of the lower prices and bigger quantities. The most famous platform in China for group-buying is Pinduoduo, but many more are following its example and will offering deals for group buying this year. Pinduoduo has experienced significant growth since its launch in 2015. It is now the third-largest Internet company in terms of market capitalization after Alibaba and JD as of 2019. Pinduoduo’s success is largely due to its group-buying model, with consumers making purchases with friends to secure a better deal.

Group buying can be beneficial for brand awareness as well – by seeking a group to join forces with and buy a given product and brand, a consumer proactively promotes this product and brand. And once the group has been formed and purchased, the brand automatically acquires new customers, and potentially, brand ambassadors. Chinese consumers are very social and so is their shopping behavior. They often buy what their peers recommend, as they trust their word more than a brand’s promise, for example. Therefore, social commerce in China relies on the ‘social factor’ of the Chinese online community, for example in sharing and buying products together as a group. Whereas, in the West, social commerce could be translated into ‘selling via social media’.

If would like to learn more about the possibilities of how to expand your business in China through cross-border e-commerce in China, feel free to contact us at info@brand.house.