Fundamentals of group buying

What it is, how it works, and what are the scenarios for luxury, DTC, and mass brands

Group buying isn’t new. Pioneered by Pinduoduo in China and deployed, in a different version, in the US by Fevo, Pacaso and Snackpass, it lets buyers form a group when making purchases.

In case of Pinduoduo, buyers engage in group purchases to share discounts. But they can also engage in group purchases to share taste. Engaging in group purchases for taste is new, and it opens up group buying from mass brands to mid-tier and luxury brands.

In the feed or on PDP, there are two buying options. One is individual and the other is group. Pinduoduo does not have a shopping cart, and uses individual buying and group buying buttons. Prices for each of the buttons are different. If a buyer selects “group buy” option, they can form a new group or join an existing group. Buyers have 24h to complete the group purchase, or the deal gets cancelled. A short window to unlock the deal incentivizes buyers to quickly tap into their networks and recruit friends and family as quickly as possible. A buyer’s network invites their own networks, creating a chain reaction.

In the scenario with the shopping cart, there are two versions of the cart. One is individual and one is group, where buyers share the same Cart ID (this can be a QR code, a link, or a token). A buyer who initiates the purchase can invite others. Groups can be exclusive and intimate, or large and mass. Invites to exclusive groups are made privately (WhatsApp, messenger). Invites to mass groups are made on social media (on TikTok, Instagram, Twitter — like CashApp does every Friday). Group buying can bring a discount, or can bring other kinds of brand benefits, like membership access, product pre-launches, event invites or special prices. Group buying also brings to customers benefits of shared ownership and access to items as investments.

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