An overview of the tuangou phenomenon, how it works online, and why it will become an increasingly popular way to shop.

1. It Takes Two (Or More) to Tuangou
The Rise and Fall and Rise of Online Group Buying

2. Tuangou
Roughly “group buying” or “store mobbing,” tuangou is a shopping method
that originated in China. People would swarm a store all at once and haggle for
a group discount on a particular item.

3. But people quickly realized that it
was a lot less painful to contact
other potential buyers and organize
massive group buys online.

4. In theory, online group buying is simple:
✦ Start a group dedicated to a specific product and set a target price.
✦ Alert your network and encourage them to add in to your group. The more people join, the
lower the final price.
✦ The group closes and vendors bid on the sale; lowest bid wins. The group is happy because
they’ve just gotten a substantial discount, and the vendor is happy because they’ve just sold
a lot of product.

5. Of course, this isn’t the first time people
have tried to arrange deals on the web.
Sites like Mercata and Mobshop started in
the 90’s but fell victim to the dot-com
bubble of 2001.
Ouch. But everyone deserves a second chance, right?

6. Why It Failed
• Insignificant savings: better deals could be found on other sites.
• Delayed gratification: buying groups could take days or weeks to form
before they had enough members to make a purchase.
• Unfamiliarity: people had yet to develop social networks online.

7. Why This Time It Just Might Work
• Familiarity: social networks are common and people are more willing to
join impromptu groups online.
• Immediate feedback: with new tools like texting, Facebook, and
Twitter, people can spread the word to friends much faster and groups
can grow quickly.
• Better savings: with more people joining groups, they’ll be able to
bargain for larger discounts.

8. Since online group buying is still in its experimental phase, companies are trying out
different formats. Pikaba and SalesScoop, for example, have designated sites.

9. Twangu has no official website, just a Facebook app. Most companies also have a Twitter account.

10. Different Sites, Different Strategies
Sale Timeframe 24 hours 5 days Unlimited
# of Sales
Occurring at Any 1 product or brand Unlimited Unlimited
Given Time
Company Initially acts as Invites vendors to
Involvement in broker, will evolve bid and manages No
Final Sale over time payment
10

11. Groupon is a variation on tuangou in that the discount is already set, assuming that enough people participate
in each round. These “group coupons” are usually for local restaurants and services, not products.

12. And if you like buying online with friends
(and you live abroad), you’ll love the spree!

13. What’s a spree?
It’s another form of online group
shopping that’s very popular in
Singapore. Interested buyers
combine their orders from one
retailer to avoid using a credit card
(which they often don’t have) and to
save on shipping fees. Sprees were
originally organized on LiveJournal,
but independent websites are
becoming more common.

14. Let Your Fingers Do the Shopping
Spree organizers select an online store, determine a batch limit (often
around $200) or cut-off date, and collect orders in the comments
section. See any patterns in the most popular brands?

15. Don’t Stop Believing
Trust is essential to a sprees success, as spree-ers pay the
organizer in advance, either by an online or ATM deposit. Once
the batch has closed and all the money has been received, the
organizer places the order.

16. Ship and Save
Items are sent to an American
address provided by a shipping
service like VPost. VPost consolidates
the orders and uses bulk mailing to
save on international shipping.

17. Warning:
Sprees May Be Habit-Forming
The organizer arranges for pick-up or
mails out the individual orders, and
participants review the organizer
online. Let the next spree begin!

18. In conclusion
Although there are still some kinks to work out, the rise of social networks
will make online group buying increasingly popular and efficient.