Get big discounts at group-buying sites

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April 27, 2000
Web posted at: 9:41 a.m. EDT (1341 GMT)

by Roberta Furger

(IDG) -- If you like the thrill of online auctions, you'll love group-buying sites like Accompany, C-Tribe, Mercata, and others. Although the products and rules vary, each site's premise is the same: The greater the number of people who buy a particular product, the greater the discount.

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Mercata and Accompany, the two most-established sites in this category, boast the largest selection of merchandise and the greatest number of buyers--the component critical to making this model work. As with auction sites, a new selection of products goes on sale every day, with buying cycles (the length of time a product is available for purchase) lasting several hours to several days. Only when a significant number of people get in on the purchase does the price start to drop--sometimes a little, sometimes a lot.

Reeling you in

Although each site gives the impression that prices change dynamically based on the number of buyers, complex rules determine just how quickly (and how far) the price of a product will drop. At Accompany, the pricing schemes are spelled out so you know just how many buyers are needed to reach a certain savings level. On one of our visits, for example, we found a listing for a kit of travel accessories for a Palm V ($50 retail), which began its buying cycle at $43. We could see that 6 people had already signed up for the kit, bringing the price down to $38. The second drop (of $2) was scheduled to kick in after 21 people had signed on to purchase the product. At 41 buyers, the price would dip to $33. The more expensive the item, the greater the incremental savings.

At Mercata, buyers have no way of knowing when or how much the price of a product will drop. Instead of simply signing on to purchase an item, shoppers place bids--and Mercata must accept the bid before the price changes. There's not much chance that Mercata would accept a $10 bid on a $150 VCR, for example, so that bid would not change the price. A $140 bid, on the other hand, might well receive the green light, driving the price down for everyone, even those whose initial bid was higher.

After scouring the Web and calling local retail stores, Susan Mills of Florence County, South Carolina, wound up buying her Sharp 600U DVD/CD player at Mercata for $159--$60 less than the lowest price she had found anywhere else. She spotted the item as a Mercata Power Buy (the site's term for a featured product), and in less than a week she was munching popcorn and watching her first DVD movie. And Kevin Womack, a systems analyst at the University of South Florida in Tampa, bought a copy of NFL Blitz, a video game for the Sega Dreamcast, for just $6 from Accompany. The game retails for $50, though Womack had seen it selling elsewhere for as little as $30.

Timing is everything

Both Mills and Womack were lucky: They shopped at the right time and snagged items at bargain prices. Fortunately, Accompany can notify you when a price drops to your sweet spot. And you'll always get the final price--even if your bid was higher.

BazaarE.com, a smaller, newer group-buying site, lets shoppers post a notice indicating their interest in a specific product; other buyers join in to create a pool. When the pool closes, BazaarE's merchants (primarily small and midsize retail stores) bid on the business. Buyers can choose, individually, to go with the same merchant or different ones, or decide not to buy at all.

At MultiBuyer.com, the selection is small and the on-screen help is minimal, but a few deals are attracting plenty of attention. During our first visit to the site, hundreds of buyers were taking advantage of a $25 gift certificate for online merchant CDnow selling for $12.50. (On subsequent visits, however, the gift certificate offer was limited to first-time CDnow buyers.) Another nice feature: Buyers can change their mind and drop out of a group at any point before the buying cycle closes, usually seven days--an option not offered at Accompany or Mercata.

C-Tribe.com, another newcomer, features discounted gift certificates for a variety of retail chains, including KB Toys and Foot Locker, as well as restaurants such as Chili's. Depending on the number of buyers, discounts can be as deep as 20 percent. You can buy multiple certificates, so the potential savings are even greater. Unfortunately, certificates can be redeemed only at retail stores, not at their online counterparts--odd, given the venue in which they are being sold.

Simply put, using a group-buying site makes sense whenever you find goods or services you want at an attractive price. Featured products change daily, so there's no guarantee that a DVD player on sale one week will still be available the next, and best-sellers such as the Palm V are not always in stock. Return policies also vary considerably from one site to another, so read the fine print closely before you buy.

Hard work, big savings

Smart traveler Zamora acknowledges the hurdles inherent in shopping at any of the new dynamic-pricing sites, but he says he's more than willing to make a few sacrifices and spend a little extra time learning the ropes if it means saving big money.

"Sure, there are some trade-offs," acknowledges Zamora. "But the savings are incredible." And for bargain-hungry consumers, that's what it's all about.

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