Packages with ten massage sessions in a dream spa, annual tickets for a season at the opera, stays in luxury hotels, tickets for a Ferrari and even balloon rides are just some of the offers that the Spanish consumer can take advantage of today with discounts of up to 70 % off the original price. The phenomenon of Collective purchases on the Internet is conquering our country by making available a wide range of leisure, beauty and relaxation products for all budgets, many of which were previously reserved for a minority.

The business concept that this type of business replicates is simple: the person who subscribes to one of these websites will receive a tempting offer consisting of various leisure activities via email every day irresistible prices to develop in your own city.

To encourage the consumer to make the purchase as quickly as possible, an on-screen clock will indicate the time remaining until the offer expires, a period that normally does not exceed 24 hours. Plans take off when the campaign reaches a certain number of buyers, usually between 20 and 30, which guarantees merchants profitable sales volume. In the moment of truth, the success of bulk purchases among Spanish consumers was so great that seldom did one of these portals have to cancel an offer due to lack of demand.

business model

As it explains Michael Vincent, Founder of LetsBonusBulk buying portals are an important advertising platform for all types of businesses, paying these businesses commissions ranging from 20% to 50% of each sale on average.

“It seems that they are paying us a lot, but if they wanted to do a mailing in 24 hours to reach two and a half million people who receive our newsletter every day, they would have to make a heavy investment. A) Yes manage to reach this audience without fixed costs. In addition, they are potential customers who live near this company. Before companies like ours existed, they didn’t have the advertising opportunities we offer them,” he explains.

In fact, the bulk purchase business is not a new phenomenon. In 2000, before the dot-com bubble burst, companies like let’s buy Attempts have been made to put this model into practice without achieving the success of current sites.

“The fact that the use of the Internet is now much more mature has been critical to these businesses. The economic crisis was also decisive. There are high-end brands that would never have launched 70% off deals in boom times,” he points out. Javier Garces, Consumer Psychology Expert the National Association for Psychosocial Studies.

exclusive clubs

Although in the end everyone who wants to belong belongs, bulk shopping portals have managed to exploit this successfully sense of belonging to a club, by adding exclusive dyes to your offer, which are very effective in selling a product. Not for nothing, given the success achieved, The English Court did not hesitate to follow the example of these sites and launch Primeriti, his own private online sales club with juicy discounts. Likewise FNAC has jumped on the bandwagon of this formula with Social FNAC, where it ranges from a 64GB iPod Touch for 160 euros to a 320GB PS3 for 130 euros, always well below the market price.

More difficult, more value

But beyond that, buying groups have picked up on a trend that is increasingly present in current marketing: offer all types of consumers the opportunity to have exciting experiences. “Social commerce in general has a rich strand of experience with a tribe close to me, from the early days of Amazon to being willing to agree to buy the same thing on Groupon. The club is a wealth of experience: the more difficult it is to become a member and the more contacts and referrals are required, the more loyalty it will generate,” he emphasizes. Gerald Costa, Professor of Marketing at ESADE.

In this sense, this type of company has found an important breeding ground on platforms of the likes of Facebook or Twitter, where they encourage buzz marketing and word-of-mouth recommendations. “Social networks play a fundamental role in our model. Based on the concept of collective purchase, the unification of many is necessary and that is the essence of social media. Furthermore, in today’s society, there is nothing more reliable than a friend’s recommendation or an acquaintance’s advice about a unique opportunity. The immediacy achieved when communicating through these channels allows our users to take advantage of the discounts,” he explains. Boris Hageney, Groupon CEO in Spain.

Luxury for a short time

The main value offered by these sites was to bring something high-end services for all types of consumers thanks to the huge discounts they offer. For many, this democratization of consumption, with companies sacrificing margins in exchange for customer loyalty, is a double-edged sword, especially for premium brands.

Corresponding Victor Gilauthor of the book Cross Summer, “Luxury brands pay particular attention to where they are sold because the consumer draws conclusions about product attributes such as quality. If a premium brand ostensibly lowers its price, it democratizes it and thus lowers the claim of its offer. Are brands unaware of this danger? Definitely not. You know the risks, but it’s a way to generate short-term revenue in a crisis context where consumption is polarizing: only premium and budget brands remain, and everything in between is struggling.

And then? Many are wondering what will happen to this type of business, which has emerged in the shadow of a severe economic crisis that has changed consumer habits and had a devastating impact on many pockets. Javier Garcés is certain: “If collective purchasing groups know how to respond to their customers’ expectations and master the challenges ahead, they will continue to play an important role in the future.”