Prior to the boom of social media such as Facebook and Twitter, group online shopping in Asia was never that popular. But with internet evolution and consumer sentiment rebounding collective buying is gaining full force to offer consumers more value for their money.

Taking Hong Kong as an example, this year has seen websites such as valuup.com and ubuyibuy.com popping up with daily deals on food and beverage, entertainment and beauty. Though the business model is simple – teaming with merchants to offer low prices to consumers so long as a minimum buy is reached - the aim behind each website differs. Overall though, does collective buying inspire loyalty in brands?

When asked what their target market group was, chief executive and co-founder of ubuyibuy.com Danny Yeung thinks that consumers of all income ranges are important. “Who doesn’t want a good deal? If you’re a middle range spender, in essence, you could move into another circle by buying deals on more up market places.”

Matthew Aitken, founder of Valuup.com, positions his company differently by offering high value experiences, because “it’s not about deals or saving money, but on the quality of the deal.” Collective buying websites are the intermediary, bringing in high-end customers to merchants. “Companies can just invest into customers rather than (invest into) marketing,” adds Aitken.

Some, such as Baniel Cheung, part-time lecturer at the University of Hong Kong’s School of Business, think that collective buying websites are only for upstart companies. They offer an attractive alternative for those who can’t afford e-marketing or basic advertising and do not have a strong customer database. 

However, Hong Kong Baptist University marketing department’s Head Professor Gerald-Paul Prendergast points out the strength of collective buying in Asia is continuing because “Asian culture tends to be collectivistic”. Nowadays, the consumer can have a more active role in the marketing process instead of “being a spectator or victim.”

 But will collective buying remain popular? Face to face shopping is still intact because shopping “is not just a functional activity but also a social activity,” according to Prendergast. Cheung, however, thinks collective buying is not sustainable. “Consumers do not have to have loyalty to any collective buying website, but to (any website) that can provide the best quality to them,” he says.

Jane Edwards-Hall, Vice President for Synovate Retail Performance in the US, says brands should question the longevity and sustainability of these new consumers. “It’s great for encouraging trial but not for continuing. I just wonder how you can breed both acquisition and retention (of consumers).”

Asked whether collective buying websites will last, Edwards-Hall believes that Groupon and such sites won’t fall off. “But they probably won’t breed a true and loyal consumer base if people are just buying on price.”

With her experience in the consumer research sector, Edwards-Hall says, “It may be with some offers that either the brand or establishment is way overpriced in the beginning or what they’re going to give consumers in the trial is of poor quality. I would recommend that marketers first get the balance right as part of their overall marketing and promotion mix. If I was one of these merchants, I would want to first be very clear that I was aiming for a certain percentage, maybe 10%, of my customer base from these sites,” said Edwards-Hall.