“China’s next export: group shopping?”
Posted by Joe Cannon
Looking for a nice example of differences in consumer behavior across cultures? I learned something today about consumer behavior in China. Apparently many Chinese consumers value the bargain — maybe not so culturally unique. But they go about it in an interesting way. Many Chinese shoppers go on a group bargain hunt — realizing that they might get a volume discount. I heard about this on the American Public Radio show, Marketplace (January 22, 2010) “China’s next export: group shopping?“ Click through to read or listen to the story — I have embedded a video of group shopping below. [Note: click through to the story to see the video, at first my embedding the video worked, but now it does not.] I know we have at least a few Chinese readers. Can you add a comment with more insight on this practice?
Tags: China, Cross-cultural
This entry was posted on Saturday, January 23rd, 2010 at 12:35 pm and is filed under Consumer behavior, International, Video. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Thanks for bringing this topic. It first got me interested a few years ago when my dad mentioned the strategy while he was waiting to buy a new car. Group shopping (TuanGou, 团购) is a prominent phenomenon in China for a variety of product categories, ranging from houses, cars, furniture, electronics, to cosmetics, and even movie tickets (Avatar it is right now). You are absolutely right. Seeking for bargains is the common goal shared by consumers in different cultures, yet it could be realized through different approaches, like using coupons in the US, and group shopping in China. Consumers in shopping groups get wholesale price. Sellers benefit from great volume. Win-win.
The popularity of tuangou among consumers in China could be related to the lack of trust in the marketplace and consumers’ need for control. Consumers experience uncertainty about the profit level and could do very little about it due to the unbalance between demand and supply. Through tuangou, they gain greater power in negotiating with sellers. In a way it is almost like small “Unions” formed by consumers against sellers. For example, the adult ticket price for Avatar 3D is about 120 RMB (14.4 USD) and still rising (rumor has it that it may soon be 200 RMB!). Through tuangou the ticket price could be brought down to 50 RMB (7.3 USD). This approach especially applies to real estate and automobile industry where higher risk is involved.
Although it seems to be getting more attention only recently, tuangou is not new. I remember having cheap summer pass at a local theater offered by my school when I was a kid back. Tuangou is also not unique only in China. My yoga studio in Colorado offers a 15% group discount for 5+ people. However, shopping in groups involves extra cost in communication and organization, which may not worth the savings. Internet and discussion forums make it a lot easier to interact, and Chinese consumers are heavy users of social media. This makes tuangou so “in” nowadays.
January 24th, 2010 at 4:03 pmThanks for the additional details SZ. It made me think that there are also social benefits that consumers receive from this form of shopping. Many people like to shop with friends and sites like Kaboodle have tried to create social shopping benefits online.
January 25th, 2010 at 10:17 am