Shopping with the herd

We track the tickers of global auctions. We flock to comparative shopping sites seeking the deal of the century. We sign up for sweepstakes galore and even occasionally invite vendors into our in-boxes to inform us of their latest discounts.

Yep, we are born bargain-hunters. And the Web’s e-bazaar has only further honed our natural instincts. Like moths on a summer night, we are drawn to its iridescent lights: Informed purchases! Cheap prices! Convenience!

True trendwatchers already know that on Aisle 10 we have one more blue-light special: group-buying services. Expats are probably familiar with this route. Perhaps your office has been blessed with a den mother who regularly organizes prospective buyers into informal purchasing co-ops that buy from food catalogs like Tengu or the Foreign Buyers’ Club. On the whole, the system allows us to circumvent the import emporiums’ price-lock. (And the power of intra-office peer pressure shouldn’t be ignored: “What? You don’t want two dozen honey-nut granola bars at half the price? And no shipping costs? It’s a steal.”)

The Web, however, offers efficiency and scale that the den mother just can’t match: At dynamic marketplaces, such as Mercata, Mobshop, ActBig, Zwirl and Volumebuy, aggregated consumers have the power to bargain. In some cases, it’s like an auction in reverse. As more people join the group, the more the price drops. Of course, this is for a limited time only, so you must act TODAY! Or tomorrow.

The buying experience here is similar to the cult of e-Bay, except the risk is low and the goods aren’t as eclectic (sorry, no rare Pez dispensers in this neck of e-commerce land). Call it aggro-shopping. After you’ve joined the purchasing group, you can track the price’s downturn at the site or, in some cases, receive e-mail notification. Conveniently, sites include “Tell your Friend” buttons so you can bring in more buyers to sweeten the deal. This is viral-marketing at its finest.

Want a demo? OK, say, you’re in the market for a Toshiba SD2200 DVD Player. According to MySimon.com, the cheapest price is $249, at SupremeVideo. (Gee, Amazon.com is selling it for only $349). Now at Mobshop, with two buyers, it’ll cost you $250. With four more buyers, it drops to $245. If 20 more buyers jump on board, the price drops to $240.

These sites have small differences, but they’re all essentially about empowering the consumers en masse. At ActBig, users can initiate buying blocks and approach vendors. (Attention den mothers: You get a commission for bringing in more buyers.)

Items at these sites aren’t limited to everyday products. There are buying groups for travel packages, pre-paid gas cards, broadband Internet access, cellphone plans, gym memberships, concert tickets and so on. Granted, such services aren’t much use to residents of Japan. For that you might try Wa! Auction (jp.waauction.com), the only like-minded site I could find. However, shopper traffic here doesn’t appear to be high enough to drive down prices — yet.

The bulk-buying concept is tailor-made for the Web. (It shouldn’t be surprising to learn that former Microsoft exec Paul Allen founded Mercata and Netscape cofounder Marc Andreessen sits on the board of Mobshop.) No other channel allows vendors to move products in such a dynamic fashion. It makes good business sense on many levels. Beyond the obvious advantages of higher sales, businesses can benefit from decreased overhead costs and from linking its inventory to quick sales. It can also conceivably be a good test market for new products.

The downsides, however, shouldn’t be overlooked. One is selection. Home electronics work well, but products such as clothing, videos or CDs? It’s hard to imagine 100 buyers clamoring for the same video when it’s only $2 cheaper at the ordinary retailer next door. But who knows?

And then there’s the crucial critical mass. If the traffic isn’t high enough, who will want to take the plunge? Yes, you can try to bring in more bidders, but your friends might get tired of you bugging them to buy yet another home entertainment component.

There also tends to be a limited amount of information accompanying products, since sites obviously want to sell the item of the day. Often you’ll have to go elsewhere to do your homework before buying. Similarly, some sites don’t display exactly how many buyers are in a particular buying cycle, which might hinder others from joining the group.

It’s said that where bulk-purchase outfits really stand to gain is in alliances (Mobshop’s offers now appear at the comparative shopping site MySimon.com) and licensing their setups to portals. Yahoo and AOL have already announced plans to integrate the group-buying model. Specialized sites with loyal communities could also easily move products. I could see video-buying blocks at, say, the Internet Movie Database, or bulk wine-buying at Epicurious.

As with e-commerce in general, this trend is definitely spreading to business purchases. While large corporations have long enjoyed the benefits of buying in bulk, the Web is also enabling further savings for small outfits. While some of the above B2C shops offer special B2B corners, Demandline.com is devoted to small businesses, who can pool their resources at this site and get discounts just like the big guys.

Yes, I admit, this is hyperconsumerism run amok. I don’t know about you, but I find it hard to spend extended amounts of time in superstores, confronted with walls of industrial-size containers of low-fat snacks and gauntlets of lawn mowers, tricycles and fishing rods. And granted, there is something sad about a price-watcher that has to check a Web page every hour to see if he saved a dollar on a PDA carrying case. Smart shopping makes cents, but some enthusiasts could better spend their money on a therapist.

If this all makes you a bit nauseous, there is an option that I’ll look at in next week’s column. In the meantime, anyone want to join me in an MP3 player buying block? Meet me on Aisle 10.