What are collective purchases

Collective purchases, also known as group purchases or group buying, represent a business model in e-commerce where a group of consumers comes together to obtain significant discounts on products or services. This concept is based on the principle of collective purchasing power, where suppliers offer reduced prices in exchange for a guaranteed volume of sales

History:
The concept of collective purchasing is not new, having its roots in traditional business practices such as buying cooperatives. However, the online version of this model gained popularity in the late 2000s, with the launch of sites like Groupon in 2008. The idea quickly spread, leading to the emergence of numerous similar sites around the world

How group buying works:

1. Offer: A supplier proposes a significant discount on a product or service, usually 50% or more
2. Activation: The offer is activated only when a minimum number of buyers commit to purchasing the product or service
3. Deadline: Offers usually have a limited time frame, creating a sense of urgency among potential buyers
4. Disclosure: Group buying sites promote offers through emails, social media and other marketing channels
5. Purchase: If the minimum number of buyers is reached within the deadline, the offer is activated and the coupons are issued to the buyers

Advantages:
Group buying offers benefits to both consumers and businesses:

For consumers:

1. Significant discounts: Consumers can obtain products and services at very low prices
2. Discovery: Exposure to new businesses and experiences that they may not have discovered otherwise
3. Convenience: Easy access to a variety of offers on a single platform

For companies:

1. Advertising: Exposure to a large number of potential customers at a relatively low cost
2. Increase in sales: Potential for a large volume of sales in a short period
3. New customers: Opportunity to attract new customers who can become regulars

Challenges and criticisms:
Despite its initial popularity, the collective purchasing model faced several challenges

1. Market saturation: Rapid growth has led to saturation in many markets, making it difficult for companies to stand out
2. Service quality: Some companies, overwhelmed with the volume of clients from the offers, they could not maintain the quality of the service
3. Reduced profit margins: Large discounts can lead to very low or even negative profit margins for participating companies
4. Customer loyalty: Many consumers were attracted only by discounts and did not become regular customers
5. Consumer fatigue: Over time, many consumers felt overwhelmed by the volume of offers in their emails

Evolution and current trends:
The group buying model has evolved significantly since its heyday in the early 2010s:

1. Focus on niches: Many group buying platforms now concentrate on specific sectors, like travel or gastronomy
2. Integration with other models: Some companies have integrated elements of collective purchasing into their existing business models, like marketplaces and cashback sites
3. Personalization: Use of data and artificial intelligence to provide more relevant offers to consumers
4. Corporate group buying: Some companies are using the model to obtain discounts on bulk purchases for their employees
5. Flash sales: Short-term offers with significant discounts, inspired by the model of collective purchasing

Legal and ethical considerations:
Collective purchases have also raised legal and ethical questions, including

1. False advertising: Concerns about the truthfulness of the advertised discounts
2. Consumer protection: Issues regarding refunds and guarantees for products and services purchased through collective buying
3. Pressure on small businesses: Criticism that the model may excessively pressure small businesses to offer unsustainable discounts

Conclusion:
Collective purchases represented a significant innovation in e-commerce, offering a new way to connect consumers and businesses. Although the model has faced challenges and evolved over time, the fundamental principles of collective purchasing power and volume discounts remain relevant in the current e-commerce landscape. As e-commerce continues to evolve, it is likely that we will see new iterations and adaptations of the concept of collective purchasing, always seeking to provide value for both consumers and companies