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Smart Mob in China for Retailer Discount 301

taweili writes "The Economist has a story about Tuangou in China. Tuangou, roughly translated into group purchasing, is basically a smart mob who arrange the meet up over the internet and show up at a retailer at a specific time and use their number to negotiate a discount with the retailer. In the story, a Tuangou group of 500 show up in Gomei (largest home electronic retailer in China) at 4pm on June 16th and negotiate a 10 ~ 30% discount for the group. Gomei not only closed the door to the normal customers but also prepared goody bags for these Tuangou shoppers. Now, that's Power to the People!"
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Smart Mob in China for Retailer Discount

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  • by ClamIAm ( 926466 ) on Tuesday July 04, 2006 @02:46PM (#15657008)
    If you got a couple hundred people to go down to your local Best Buy, they'd probably call the cops. Even if they didn't, the iron-fisted corporate policies of most retailers would probably preclude getting any kind of deal.
    • If you got a couple hundred people to go down to your local Best Buy, they'd probably call the cops. Even if they didn't, the iron-fisted corporate policies of most retailers would probably preclude getting any kind of deal.

      Actually, if you showed up and spoke with the store manager, you'd probably get a deal. Especially if there is another place within a simple travel, and you're organized enough to leave if you don't get the discount.
    • by Midnight Thunder ( 17205 ) on Tuesday July 04, 2006 @03:03PM (#15657074) Homepage Journal
      If you got a couple hundred people to go down to your local Best Buy, they'd probably call the cops. Even if they didn't, the iron-fisted corporate policies of most retailers would probably preclude getting any kind of deal.

      If you contacted the retailer and told them you could guarantee that 500 people would be willing to buy their product, then I am sure they would be happy, especially if you tell them you could go somewhere else. After all what is a small discount if you manage to sell 500 copies of the product. In the end it has all to do with the approach you take and the fact that a good business is in the business of making money, preferbly in a legal manner.
      • by xenocide2 ( 231786 ) on Tuesday July 04, 2006 @03:42PM (#15657192) Homepage
        I partly wonder what the hell you could buy that a retailer would have 500 of on hand. Or even 100. Food? The margins are already quite thin there; you can't negotiate a deal on that. Cars? Possibly. Electronics? That's what they were buying in story, mostly. My personal favorite: apartments? Only in China would you find that much free occupancy, and bargining is already built into the apartment rent game.

        Instead, I suspect the real reason this wouldn't happen in the states is that the people who organize it would negotiate a volume discount and keep a bit of it for themselves. Sort of like what already happens with Sam's Club and Costco. I shudder to think what would happen if it did become acceptable in the US: astroturf groups paid for by retailers to solicit such group bargining.
        • Get a rain check. A promise to back order the item at the sale or agreed upon price. If they do not honor it, then in most jurisdictions I know of they would be guilty of 'bait and switch'.
          • I can only speak for my experiences in California, but that's just not true so long as the store had some on hand when the item was advertised. If it wasn't advertised, then there is no bait and switch. No advertisement means no bait.

            Your idea of a rain check is also silly depending on the quantity demanded. If a chain of stores with one distribution center places its order for an item six months in advance, then 500 people come to one store demanding rain checks, what is the company supposed to do if it
        • by DeadChobi ( 740395 ) <DeadChobi@@@gmail...com> on Tuesday July 04, 2006 @06:24PM (#15657617)
          It's not 500 of one item. For example, if this happened at a neighborhood Best Buy, it would be 500 people buying huge quantities of various items. Maybe 10 people are in to buy a refrigerator and a washer/dryer. Another 100 are going through CDs and DVDs, and might buy a new laptop. Still another 250 are looking thorugh the home theatre section. It's a lot easier to make money when you know you've got guarenteed customers. If you plan it in advance, and the store owner is in on it, he might be able to stock up if all of you wanted one specific item, but the impression I get is that that is not what is happening. It's not like 500 people standing in line for a release of something.

          Discount sales only exist for one reason: to drum up business. Retailers attract you by making everything cheaper, you buy more stuff, their margin stays the same, and they've attracted some new customers. That's all the game is. This tactic in China only gives some of the power to the consumer.

          And a negotiation group such as you've mentioned would be beneficial to the consumer as well as to the retailer, by ensuring steady business for the latter and volume-level discounts for the former.
        • You've mis-read it (Score:3, Interesting)

          by Moraelin ( 679338 )
          You've mis-read it. One guy had bought a TV _for_ his new apartment. As in, he had just bought a home from somewhere else, and then discovered that he also needs a TV, furniture, etc. So he joined such a group and bought them at wholesale prices.

          As for what you could buy in the USA that way, well, I don't know about the USA, but here in Germany most retailers have pretty large margins on anything. Just look on how much they can cut the prices periodically on some stuff, for no other reason than the doctrine
      • You can usually buy direct. The HeadFi people are known to do things like that. Find X people that want a certian headphone, enough that you are over the minimum for direct sales. Have one guy collect the cash, place the order, then ship the phones out to all the buyers. You end up with a substantial discount since you are paying what the retailers pay, esssentially.
      • by Bravoc ( 771258 ) on Tuesday July 04, 2006 @08:37PM (#15657956) Journal

        Actually, I do this all the time.

        One of my hobbies is 4X4 Trucks (old Ford Broncos specifically). It is not uncommon at all for us to put together a "group buy" on something. Some inspired indavidual will contact a vendor for some product; a winch, wiring harness, tires, wheels, shocks, etc. and propose a "group buy"

        The vendor will give us a critical mass quantity (usually around 10 or so) and offer a substantial discount (10%-30%). There is usually an email storm that then insues as news of the deal is circulated. If the quantity and deadline are met, the vendor ships the product to the individuals that participated in the offering

        Smaller scale than "hundreds" of people, but I have gotten some pretty sweet deals doing this.

        Yes, it works in the U.S.

    • by Anonymous Coward on Tuesday July 04, 2006 @03:05PM (#15657082)
      If you got a couple hundred people to go down to your local Best Buy, they'd probably call the cops. Even if they didn't, the iron-fisted corporate policies of most retailers would probably preclude getting any kind of deal.

      Congratulations, you just discovered the difference between a free market and USA-style capitalism.
    • by Anonymous Coward
      Ever work in retail? Or do math? if 1 person comes in, wants to buy a 100 dollar item, and you have, say, a 25% markup, you're making 25 bucks, right? If 100 people come in, and each want that particular item, but want a 20% discount, you're still making $500 in profit, moving more inventory, and possibly getting a lower cost from the manufacturer if your volume increases enough. While the store would obviously rather make full sticker price, if you don't take their money, someone else who can do math will.
    • In fact, they did: http://www.improveverywhere.com/mission_view.php?m ission_id=57 [improveverywhere.com]

      Granted, they aren't trying to buy anything... but it's still humourous nonetheless to see management flipping out.
    • If you got a couple hundred people to go down to your local Best Buy, they'd probably call the cops.
      You're probably right [improveverywhere.com]
  • Sounds interesting but what if you don't get the discount you want? Or maybe the reatiler doesn't gove you a discount at all?

    Potentially you just wasted a byunch of peoples time, and probably a lot of the people who showed up would buy without the discount anyways since they are already there cash in hand.

    Of course that would be the last time that particular retailer was approached.

    In the car tuning scene "group buys" have been commion for years, though they generally don't involve people personally showing up anywhere or have anywhere close to this scale.
  • I must be tired I saw body bags instead of goody bags that would be some hardcore negotiations.
    • Re:hardcore (Score:2, Insightful)

      It's body bags when a civilian mob are dealing with the government. However, government officials do give goody bags to each other.
  • People != Mob (Score:5, Interesting)

    by Distinguished Hero ( 618385 ) on Tuesday July 04, 2006 @02:49PM (#15657026) Homepage
    Now, that's Power to the People!

    Actually, "power to the mob" may be a better description. Mob based power has existed throughout history, and it usually has not been pretty. Furthermore, if you're an individual (in the true sense of the term) who does not enjoy associating with the mob, you tend to be screwed over by those who do. Food for thought.
    • Mafia? (Score:2, Insightful)

      by tepples ( 727027 )
      Mob based power has existed throughout history

      What are the major differences between short-lived mobs such as these and more permanent mobs such as Cosa Nostra and Yakuza? Can a mob of fair users overpower the MAFIAA [mafiaa.org]?

    • Re:People != Mob (Score:2, Interesting)

      by zCyl ( 14362 )
      Mob based power has existed throughout history, and it usually has not been pretty.

      Since this is the fourth of July, maybe we should consider that sometimes, even though the process is not pretty, the history books record the end results of a mob as an empowerment of the people. After all, the American Revolution was essentially started by small groups of people having little meetups because they were pissed about taxes, and then they eventually started organizing mobs to protest.
    • Re:People != Mob (Score:3, Insightful)

      by mgblst ( 80109 )
      I was not sure whether or not that comment was actually sarcastic. This is not really power to the people.

      Power to the people is changing your government to treat people better (American Civil War, oust Ferdinand Marcus)

      Power to the people bringing people back from war (Vietnam war)

      Power to the people IS NOT getting a discount on some consumer products.

      Is this what we have become?
  • Laws of market. (Score:5, Insightful)

    by Volanin ( 935080 ) on Tuesday July 04, 2006 @02:54PM (#15657041)
    No one here disagrees that Tuangou is really a good idea. But due to the way market works, if this trend catches on nationwide, soon there will be a slowly increase in prices, so that the discount they ask for will result in the current prices of today. Buying outside a Tuangou will become quite more expensive and impracticable.

    Please, correct me if I am wrong.
    • It's not really a bad situation for the retailler. Mostly they run numbers like $/sf or $profit/$salaries, so having a large crowd of people ready to spend big bucks will let them keep those metrics high while reducing their margin.

      If these really took off then it'd be more likely to see stores that only open to mobs. Why not start an electronics warehouse that has very low overhead and only opens to groups of 500 or more - you'd keep your running costs very low and probably shift as much product as bestbuy
      • Profit in the retail business (and most other areas) is the unit-profit multiplied by the volume. If you increase the volume, you can decrease the unit profit and still make a greater profit. If you can guarantee 500 people buying things, then this is a definite increase in volume.

        The thing a lot of people seem to be missing is that the store keepers are not giving discounts out of any kind of altruism or fear of the mob, they are doing it because they make more money. They are increasing the volume b

    • Price is determined by both supply and demand. On the supply side, there's a reason a retailer is willing to accomodate the group: it's a lot of sales at once. Because it's more efficient, the cost to the retailer should go down. On the demand side, it also fights many of the retailer tactics to improve their margins: loss leader items are designed to bring people into the store. You come in to buy a new CD cheap, and leave with a new car stereo system. They're counting on consumers not spending time resear
    • Re:Laws of market. (Score:3, Insightful)

      by mochan_s ( 536939 )

      No one here disagrees that Tuangou is really a good idea. But due to the way market works, if this trend catches on nationwide, soon there will be a slowly increase in prices, so that the discount they ask for will result in the current prices of today. Buying outside a Tuangou will become quite more expensive and impracticable. Please, correct me if I am wrong.

      Isn't that the whole point of the weekly circulars in the US?

      You're basically manipulating towards group buy there.

      People will buy something

    • Sounds like the jerks who sell gas around here. A year or two ago, when prices first started to really spike, one particular outlet offered 3.5 cents (CAD) off a liter of gas at the pump. After a while, the practice caught on, and soon enough everyone was doing it. Neat idea, right? Yeah, except that, instead of offering an actual discount, they simply jack the posted rate by 3.5 cents and then give everyone the "sale price" at the register.
    • Looks like someone wasn't paying attention in Econ 101. The way market works is that people sell at exactly the price they feel "is worth it". Buying in bulk is cheaper because it is ECONOMICALLY CHEAPER. Selling individual items requires that every item be stocked, tagged, picked up by a customer, scanned and ringed up at the register, and paid for in usually small transactions. Buying N items in bulk means N-1 transactions, N-1 time saved at the cashier's, a good deal less time spent stocking, less risk p
    • Re:Laws of market. (Score:2, Insightful)

      by maggern ( 597586 )
      >a slowly increase in prices,

      Eh no. There will be a shift in negotiating power, forcing the retailers to lower they're prices whenever a buying-mob knocks on the door. I'm assuming that the buying-mobs are choosing stores that have alternatives (other stores within a few hundred meters).

      If a product in in a store has an optimal quality/price which maximaze sales (sold units) that optimal volume will not change if mob-buyers appear. (which will be pretty seldom per store).

      Regular customer:
  • Mob Rules (Score:3, Insightful)

    by Doc Ruby ( 173196 ) on Tuesday July 04, 2006 @02:54PM (#15657042) Homepage Journal
    All we ever got from our flashmobs in NYC was blowing the "terrorized" mindset with an edgy kumbayah. Meanwhile, Chinese get bargains. Who are capitalists, and who are the brainwashed masses?
  • Heh (Score:2, Funny)

    by hyfe ( 641811 )

    Gomei not only closed the door to the normal customers but also prepared goody bags for these Tuangou shoppers. Now, that's Power to the People!"

    Yes, the ability to buy luxury-goods at discounts..

    .. such an important part of freedom. I mean, what *would* we do without it?

    On, second though, I live in Norway where everything is ridioilously expensive. so the I think the answer is something like 'Spend all winter getting drunk wondering why there's only 2-3 hours between sunset and dawn, and subsequently

    • So all winter night lasts 2-3 hours and all summer it doesn't exist?
      • by hyfe ( 641811 )
        Daily daylight in December is about 1.5 hours where I live. June has about 1.5 hours of not sun daily, although it's bright as hell anyways, as the sun is just below the horizon.
      • by hyfe ( 641811 )
        Oh, I'm stupid. Switch dawn and sunset obviously.

        I hate writing foreign.

  • by __aaclcg7560 ( 824291 ) on Tuesday July 04, 2006 @02:59PM (#15657060)
    Who wants to mob up on an NYC Apple store to see if they're give us a massive discount? Please leave stones at home since we don't want to break the glass house.
  • by C0vardeAn0nim0 ( 232451 ) on Tuesday July 04, 2006 @03:00PM (#15657066) Journal
    but mob shopping is old news in brasil. usually it involves closelly related ppl, like a large familly or employees of the same company banding togheter to buy goods in bulk.

    the most common itens are "back to school" goods, such as notepads, pens and stuff like that.
  • HURRY!!! (Score:5, Funny)

    by hullabalucination ( 886901 ) * on Tuesday July 04, 2006 @03:04PM (#15657076) Journal

    The People's Glorious Struggle Against the Opressive Running Dog Capitalists Bargain Barn offers 25% OFF to YOU AND EVERYBODY IN YOUR CADRE!!! So stop on by TODAY!!!

    * * * * * * *

    So, this capitalist lackey and his bourgeoisie imperialist masters walk into this bar looking to oppress the proletariat, see, and there's a frog on this one guy's head, see? And the bartender says, "Hey...what the heck is THAT?!" And the frog replies, "Well, it started as a wart on my ass..."
    --Comrade Henny Youngman

  • Maybe not news? (Score:5, Interesting)

    by gardyloo ( 512791 ) on Tuesday July 04, 2006 @03:07PM (#15657087)
    I don't know how big standardized retailers work in China; I only shopped at one in Xian when I was there. But everywhere else, you're expected to bargain like crazy if you want to buy almost anything. Price cuts of up to 7/8 aren't uncommon. It takes tourists a while to catch on (it took us several days, not having a local guide), but after a while you get in the habit of just saying, "No, I don't want that", until the price gets haggled down by 50% maybe twice, maybe three times. I'm not terribly surprised to see this happening on a larger scale.
    • Re:Maybe not news? (Score:2, Interesting)

      by DigiShaman ( 671371 )
      Dude, thats ALL of china. Haggling is a way of life in China...even for a bottle of Coke at a corner market. However, more advanced retail chains use standard price tags. It's all part of the process of going from a communist society to one built on capitalism. It will take time for them to learn the "ropes" of how to keep and retain customers.

      BTW, the marketing system still needs much refinement too. Again, I'm personally seeing progress each time I go back to China (namely Shanghai). All very good news fo
      • Re:Maybe not news? (Score:4, Insightful)

        by A beautiful mind ( 821714 ) on Tuesday July 04, 2006 @04:11PM (#15657283)

        Going from a fake-communist society to capitalism is progress? Certainly. Is Capitalism the ideal? Hell no.

        The most important progress is capitalism in China? That's the pinnacle of stupidity. Going from a dictatorship to a democracy, that would be progress instead of turning them into a consumer.
        • Maybe China will become democratic due to an increase in the standard of living provided by capitalism. Or maybe you would rather have them wallow in poverty because you have something against capitalism?
          • Re:Maybe not news? (Score:5, Insightful)

            by Ohreally_factor ( 593551 ) on Tuesday July 04, 2006 @08:09PM (#15657895) Journal
            I've never understood the logic that says when people become happy consumers that FREEDOM and DEMOCRACY are right around the corner. If anything, our experience in the U.S. points to the opposite.

            While democracy might give rise to capitalism, it doesn't follow that capitalism will give rise to democracy. The two are not equivalent.
      • What the hell has to do haggling with capitalism or communism ?

        There is haggling in a lot more countries than China, lots of them capitalists and with democracies. I happen to live in one of those.

        It just seems that you don't travel outside your country (and neither your moderators).
  • by roman_mir ( 125474 ) on Tuesday July 04, 2006 @03:08PM (#15657091) Homepage Journal
    Isn't it the case that when someone hears about a new mob that is going for discounts for stuff this person doesn't even need, (s)he is more likely to join just because of a perceived advantage? It is strange, on one hand people seem to be cheap, on the other hand I am sure many of them end up spending money on things they don't really need.

    I buy very few things. My appartment has one bed, 3 chairs (a gift, I didn't buy those,) a notebook computer, an old filing cabinet (another gift,) a couple of kettles, a frying pan, a steaming pot, some drinking glasses, an oscilloscope, a 3 way power transformer, a digital CPU programmer, an unfinished 3D printer, a few small tools, a VEX robot set with some addons, some clothing, a vacuum cleaner and a few normal household appliences (washer/dryer/fridge/stove/microwave oven/dishwasher.) That is it. I probably should get a sofa, but I am reluctant, I am thinking about building my own table, I havea built in bar-table. I've been living this way for the past 3 years and I think I have a little too much stuff. A buying mob like this would not interest me unless I could get ridiculous discounts, like really ridiculous, like 90% off, and I don't buy cheap stuff (as strange as it sounds,) everything I do own is quite expensive and of good quality.
  • visit them here: http://www.gome.com.cn/ [gome.com.cn] and as far as i could tell they are pretty expensive so I can see why they need mob.
  • Leave it to the Chinese to take a 'stupid human trick' and do something useful with it...
  • In North America, 500 people will show up when Cabbage Patch dolls are released, and WANT to pay $60 a pop for them, and will kill each other over them to boot. You couldn't get 500 people in North America to agree on what color the sky is, let alone coordinate enough to get a discount on something they will pay double to get anyways.

    Lets put it this day, how many people show up at a gas station and happily pay way too much money for gas.

    We make too much money in North America, which is why while individua
  • mob (Score:5, Insightful)

    by Pliep ( 880962 ) on Tuesday July 04, 2006 @03:48PM (#15657216) Homepage
    when you are with 500 people, it's a fine line between negotiating and threatening to get a discount.
  • by Anonymous Coward on Tuesday July 04, 2006 @03:49PM (#15657219)
    This sounds more like a case of Chinese mass hysteria and a spin on a very common scam used by confidence tricksters and indeed marketers everwhere. Ok you are a retailer, you get someone skilled in the art to arange for 500 people to "flashmob" your store then you sell them loads of crap at the usual discount you give to everyone else - oh just be chance you have a few goody bags on hand. If I was ordering in quantities of 500 I would expect big discounts.

    It works because people are happy to part with money when they see their peers doing likewise and they hate to pass up a bargain.

    Trust the Economist to be taken in by it - but then they believed in that Enron really was a new business model based on the lightweight economy.
    • Dangerous idea, though.

      First, you have a mob of 500 people, which is going to become really nasty if they realize they're being ripped off.

      Second, even worse, you have a mob of 500 *connected* people, who if annoyed enough might as well figure out a way of getting revenge.
  • Things like Pipeline Card [pipelinecard.org] come to mind where by banding together theyre trying to negotiate better deals through collective buying power, and various proffesional bodies are able to negotiate discounts on other products (The Pipeline example is fuel)
  • I don't see this as anything new, other than people taking the initiative from the business world and the online world and putting it to practice in real life. People have been doing this for years in the US, although just not at mainstream companies (for example a lot of the aftermarket alloy rims forums online contain sections where groups of people negotiate a discount for ordering a large quantity). I have to commend them for taking it out to the streets where it is obviously working out for them, but i
  • Plus... (Score:2, Funny)

    ...they used the word fortnight in the article. And that's just awesome.
  • by Beryllium Sphere(tm) ( 193358 ) on Tuesday July 04, 2006 @04:22PM (#15657302) Homepage Journal
    Somewhere in the rubble of the ancient dot-com bubble, there's a company called Priceline which aimed to do the same thing virtually. If memoory serves their idea was to aggregate buyers and contact a merchant to see if they'd meet the desired price.
    • Actually, this is closer to mercata.com [geek.com]'s business. With Priceline, the seller can accept each buyer's bid separately, at whatever price each individual offers. Mercata was about group buying power: shoppers offer to buy a product at some price, with the understanding that the final price may go down if enough customers join in on the deal.

      The other difference is that Priceline is still around, but Mercata isn't.

    • Priceline is still around, fwiw. I've used it a couple of times in the last year for really good prices on hotel stays. I don't know if their current business model differs from what it was six or so years ago (I wasn't a customer then), but they are still around and doing (afaict) good business.
  • by melted ( 227442 ) on Tuesday July 04, 2006 @04:29PM (#15657320) Homepage
    Dell releases coupons with staggering discounts, those coupons go to "deal" sites. "Smart mob" of buyers with coupon codes floods Dell's website and gets their 30-40% off. Regular Joes continue to buy at twice of what they could have paid.
  • Larry Niven should be proud. Although IIRC his mob was walking off with stacks of flat-screen (again ahead of his time) televisions at a 100% discount.
  • Wholesale? (Score:3, Informative)

    by Neo-Rio-101 ( 700494 ) on Tuesday July 04, 2006 @05:55PM (#15657545)
    With that many people, why did they want to get a retail discount? I would have found the wholesalers and drummed them up for one.... or better still, used the people to form a company!

In less than a century, computers will be making substantial progress on ... the overriding problem of war and peace. -- James Slagle