The Chinese Consumer
The Wall Street Journal reported on a practice that is becoming more and more common in China: getting a group of people together that are interested in buying the same thing, meeting at a certain store at a given time and place, and demanding a group discount. It’s called tuangou, or team purchase. Consumers will arrange the details in chat rooms or on internet websites like 51tuangou.com, that are designed to cater to these types of arrangements. I guess when you put 1.3 billion people together in one country they’re bound to think of some way to use their numbers to get discounts.
According to the article, Chinese consumers have negotiated discounts for anything from cabinets to new car purchases–and been successful at getting up to 35% off! For some reason, this type of deal-finding just hasn’t appealed to the American consumer:
In the U.S. and Europe, several Web-based businesses were set up in the late 1990s to arrange discounts on group purchases of consumer goods. But customers were turned off by the amount of time it took to complete transactions and other complications, and many of the Internet businesses failed.
China’s version of team buying, however, leads to face-to-face negotiations. “That’s a little scary, the mob mentality,” says Tom Van Horn, former chief executive officer of Mercata Inc., whose now-defunct Web site attempted to negotiate bulk discounts for U.S. consumers.
Is this type of group-negotiation healthy for the economy, or does it put too much downward pressure on prices for the seller?
Are consumers successful at negotiating a discount solely because of the opportunity to sell more products, or are there other factors involved (i.e., unfair intimidation, boycotting, etc.)?
Why hasn’t this type of thing been successful in America? Is the American consumer characteristically different from the Chinese consumer? Or is the difference in the price system and/or merchandisers?
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