Patent Application
20130006747
The present invention relates generally to e-commerce and, more particularly, to system and method for online group-buying services.
Group buying, also known as collective buying, offers products and services at significantly reduced price on the condition that a minimum number of buyers would make the purchase. Origins of Group buying can be traced to China where Tuangou or team buying was executed to get discount prices from retailer when a large group of people were willing to buy at the same item. In recent time, Group-buying websites have emerged as a major player in online shopping business. Typically, these websites feature a deal of the day, with the deal kicking in once a set number of people agree to buy the product or service. Buyers then print off a voucher to claim their discount at the retailer. Many of the group-buying sites work by negotiating deals with local merchants and promising to deliver crowds in exchange for discounts. Group-buying sites are back in demand as small businesses look for ways to promote their products to budget-conscious consumers in a weak global economy.
Under Tuángòu, an item must be bought in a minimum quantity or dollar amount, otherwise the seller will not allow the purchase. Since individuals typically do not need multiples of one item or do not have the resources to buy in bulk, group buys allow people to invite others to purchase in bulk jointly. These group buys often result in better prices for the individual buyers or ensure that a scarce or obscure item is available for sale. If subscribers to a discount website are tempted by a discount offer, they enter their payment details online and wait. Once a minimum number of people sign up for the same offer, the deal is confirmed and a voucher is sent to their inboxes. Shops, restaurants and other retailers that partner with these discount websites have to take hefty price cuts. But it means they have instant access to a whole new group of customers.
Groupon (a portmanteau derived from “group coupon”) is a deal-of-the-day website that features discounted gift certificates usable at local or national companies. The company offers one “Groupon” (“group coupon”) per day in each of the markets it serves. The Groupon works as an assurance contract using The Point's platform: if a certain number of people sign up for the offer, then the deal becomes available to all buyers. On the other hand, if the predetermined minimum (e.g., the tipping point) is not met, then no one gets the deal that day. This reduces risk for retailers, who can treat the coupons as quantity discounts as well as sales promotion tools. There are potential problems with the business model. For example, a successful deal could temporarily swamp a small business with too many customers, risking a possibility that customers will be unsatisfied, or that there won't be enough product to meet the demand. On the other hand, frequently unsuccessful deals bring negative experience for the consumers, who are not able to get the discount product or service as they hoped for.
A system and method for providing online group-buying service is proposed. A group-buying company negotiates with a merchant to select a featured item to be sold on a group-buying website. The group-buying company and the merchant execute a binding agreement with regard to the feature item. The featured item is a product or service provided by the merchant to the group-buying company conditioned upon a first number of minimum sales. The group-buying company then advertises the feature item, and receives a number of orders from consumers purchasing the featured item. The group-buying company calculates a total number of sales and thereby determining a required remaining number of sales based on a second number of minimum sales. The group-buying company then processes the purchase orders if the required remaining number of sales has been reached.
In one embodiment, the merchant requires the first minimum number of sales, and the group-buying company requires no minimum number of sales (e.g., the second minimum number of sales equals to zero) for the deal to go through. If the total number of sales does not reach the first minimum number of sales, then the group-buying company guarantees the expected profit of the merchant and the deal goes through.
In another embodiment, the group-buying company requires the first minimum number of sales, and the merchant requires no minimum number of sales (e.g., the second minimum number of sales equals to zero) for the deal to go through. If the total number of sales does not reach the first minimum number of sales, then the merchant guarantees the expected profit of the group-buying company and the deal goes through.
In yet another embodiment, the merchant requires the first minimum number of sales, and the group-buying requires the second minimum number of sales, or vice versa. The second minimum number is lower than the first minimum number. If the total number of sales does not reach the first minimum number of sales but reaches the second minimum number of sales, then the entity requires the second minimum number of sales guarantees the expected profit of the entity that requires the first minimum number of sales and the deal goes through. In one example, a required minimum number is communicated to consumers via the group-buying website. In another example, even if the required minimum number is not reached, the deal is still on and the merchant provides the ordered product/service to consumers.
Other embodiments and advantages are described in the detailed description below. This summary does not purport to define the invention. The invention is defined by the claims.
The accompanying drawings, where like numerals indicate like components, illustrate embodiments of the invention.
Reference will now be made in detail to some embodiments of the invention, examples of which are illustrated in the accompanying drawings.
In the example of
The different modules within group-buying management module 105 are function modules that may be running on the same or different computer servers. The function modules, when executed by processor 102, allow online group-buying company 120 to negotiate and execute business deals with merchant 130, and to provide online group-buying services via group-buying websites to consumers via communication between server computer 101 and other client computers. In one embodiment, various activities are performed by exchanging communication messages in online group-buying system 100 via WAN/LAN 150 (e.g., the computers are connected to WAN/LAN 150 via wired or wireless links 151, 152, and 153 respectively). In a first example, group-buying company 120 and merchant 130 may communicate with each other and negotiate a business agreement via email exchanges between server computer 101 and client computer 132 (e.g., depicted by a thick dashed-line 154). In a second example, group-buying company 120 features a service on website 160 and delivers a coupon code to consumer 140 for the sold service (e.g., depicted by a thick dashed-line 155). In a third example, consumer 140 redeems the coupon code for the purchased service under instructions provided by merchant 130 (e.g., depicted by a thick dashed-line 156). All the activities performed by the different parties and all the information created and updated related to all the business transactions are saved by server computer 101 onto DB104.
In one novel aspect, the business agreement between group-buying company 120 and merchant 130 does not follow a traditional group-buying model with an explicit tipping point. Typically, buyers from a discount group-buying website place their purchase orders for a featured item offered at a discount price, and they enter their payment details online and wait. Once a minimum number of orders (e.g., the tipping pint) have been satisfied, the deal is confirmed and a voucher is then sent to the buyers. If the minimum number of orders has not been satisfied within a certain amount of time, however, the deal does not go through and the buyers do not get what they have hoped for. Frequently unsuccessful deals will bring negative experience for the consumers. To improve consumer buying experience, and to make more successful deals while still bring expected profit, a group-buying model with implicit tipping point is provide below.
The negotiation and execution of the final agreement is the most critical part in online group-buying business so that both parties can meet their business expectation while provide group-buying services to consumers with discount price, good quality, and overall satisfaction. From the group-buying company point of view, investigating in a new featured item, designing website, and providing post-sale services etc. are all associated with certain cost. Therefore, it is typically reasonable for a group-buying company to expect a minimum amount of profit from each featured item. Likewise, from the merchant point of view, a deeply discounted offer brings much smaller profit margin, and therefore normally needs to be offset by a large quantity of sales. As a result, both the group-buying company and the merchant may require a minimum number of sales in order for the deal to go through. The minimum number of required sales is typically included in the final agreement. From consumer point of view, however, it is discouraging when they place an order for a featured item but end up not getting the deal when the minimum number of required sales is not met. Therefore, it would be much appealing to consumer to buy discounted products/services that are not conditioned upon the minimum number of sales requirement.
Although the number of sales required is displayed as one of the condition for a deal to go through, the novel group-buying model does not necessary require such minimum number imposed on the consumer. In some embodiments, there is no explicit required number of sales displayed to the consumer, even though the group-buying company and the merchant may establish one or more internal requirements in its final agreement. In other embodiments, the explicit minimum number of sales displayed to the consumer is different from (e.g., much lower than) the internal established requirements. Alternatively, even if the displayed minimum number of sales requirement is not met, the deal may still go through under certain circumstances. Different embodiments of the present invention are now described below.
In one example, a newly established group-buying company and a famous Movie Theatre agree to have a movie ticket sales campaign. The regular ticket price is $50,the Movie Theater agrees to sell a minimum 100,000 tickets to the group-buying company at price $20 (P=20, M=100,000). The group-buying company then uses various sales techniques trying to sell as many tickets as possible at price $25 (D=5). The various sales techniques may include extending expiration day for the tickets, bundling multiple featuring deals, and reducing the sales price. If more than 100,000 tickets are sold (e.g., T=102,000), then the group-buying company pays the Movie Theater T*20 and the Movie Theater supplies T tickets. Alternatively, the group-buying company and the Movie Theater may agree to share the profit from the extra sold tickets (e.g., share the $2000*5 extra profit) under the contract terms.
On the other hand, if less than 100,000 tickets are sold (e.g., T=98,000), then the group-buying company guarantees to pay the Movie Theater M*20. It is noted that although the minimum required number M is not met through the actual sale, the deal still goes through. The group-buying company guarantees the expected profit for the Movie Theater. For a newly-established group-buying company, it is willing to take such risk so that its name can be promoted to a large amount of potential new customers. In a first variation, the group-buying company pays the Movie Theater M*P (e.g., 100,000*20) upfront and the Movie Theater supplies M tickets. In a second variation, the group-buying company guarantees the Movie Theater its expected profit. If the Movie Theater expects to make $5 for each ticket, then the group-buying company pays the Movie Theater 98,000*20, plus $5 for each unsold ticket (e.g., 2,000*5), and the Movie Theater supplies T tickets. In one advantageous aspect, the minimum required number is an internal tipping point defined in the agreement between the group-buying company and the merchant. Such required minimum number, however, is not displayed on the webpage so that the buyers are more attracted to make the purchase decision knowing the deal is guaranteed.
On the other hand, if the total number of sold item T is less than the minimum required number M, then further calculation needs to be performed in step 607. The expected profit by the group-buying company is M*D, while the actual sales proceeds is T*(P+D). The calculated difference is thus C=T*(P+D)−M*D. In step 608, it is verified whether the calculated difference C is a positive number. If yes, then the group-buying company pays the merchant the difference C, and the merchant supplies T products/services (step 609). If no, then the merchant pays the group-buying company the difference −C, and provides T products/services (step 610). Regardless of the actual sales, the deal always goes through because the merchant guarantees the minimum sales number requirement by taking its own risk.
In one example, a newly-opened restaurant wants to promote a new lobster meal through a well-established group-buying website. The regular price of the lobster meal is $120, and is sold to the group-buying company for $50 (P=50) per meal, and is in turn sold to the consumer for $60 (D=10) per meal. Because the group-buying company expects to make a minimum profit of $5,000 from this deal, it thus requires a minimum number of 500 (M=500) meals to be sold. If only 400 meals (T=400) are sold, the deal still goes through and the restaurant guarantees the expected profit for the group-buying company. For a newly-opened restaurant, it is willing to take such risk so that its name can be promoted to a large amount of potential new customers.
There are several ways to realize the guarantee. In a first variation, the restaurant gives the group-buying company $5,000 upfront for promoting the sale, regardless of how many meals are sold. The sales price may be determined by the restaurant, and all the sales proceeds go to the restaurant. In a second variation, if the group-buying company expects to make $10 profit per meal, then the restaurant gives $10 for each unsold meal short of 500 (e.g.,(M−T)*10 =$1,000) to the group-buying company. In one advantageous aspect, the minimum required number of sales is an internal tipping point and is not displayed to the consumer. Alternatively, the required number of sales displayed to the consumer may be a different number (e.g., M′=100) that is much lower than the internal tipping point to encourage purchase decision. Furthermore, even if the displayed required number of sales is not satisfied, the deal still goes through.
From the consumer perspective, the required minimum numbers (M1 and M2) are internal tipping point negotiated between the group-buying company and the merchant, and thus are not exposed to the consumer. In some embodiments, the webpage does not advertise any required minimum number of sales in order for the deal to go through. In other embodiments, the webpage advertise a much lower required number than the actual required minimum number. In yet other embodiments, even if the advertised required number is not satisfied, the deal still goes through and the consumer will receive their ordered products/services. Either one of the parties would take the risk of loss or both parties share the risk of loss under the pre-negotiated contract terms.
In one or more exemplary embodiments, the functions described above may be implemented in hardware, software, firmware, or any combination thereof. If implemented in software, the functions may be stored on or transmitted over as one or more instructions or code on a computer-readable (processor-readable) medium. Computer-readable media include both computer storage media and communication media including any medium that facilitates transfer of a computer program from one place to another. A storage media may be any available media that can be accessed by a computer. By way of example, and not limitation, such computer-readable media can comprise RAM, ROM, EEPROM, CD-ROM or other optical disk storage, magnetic disk storage or other magnetic storage devices, or any other medium that both can be used to carry or store desired program code in the form of instructions or data structures, and can be accessed by a computer. In addition, any connection is properly termed a computer-readable medium. For example, if the software is transmitted from a website, server, or other remote source using a coaxial cable, fiber optic cable, twisted pair, digital subscriber line (DSL), or wireless technologies such as infrared, radio, and microwave, then the coaxial cable, fiber optic cable, twisted pair, DSL, or wireless technologies are included in the definition of medium. Disk and disc, as used herein, include compact disc (CD), laser disc, optical disc, digital versatile disc (DVD), floppy disk, and blue-ray disc where disks usually reproduce data magnetically, while discs reproduce data optically with lasers. Combinations of the above should also be included within the scope of computer-readable media.
Although the present invention has been described in connection with certain specific embodiments for instructional purposes, the present invention is not limited thereto. Accordingly, various modifications, adaptations, and combinations of various features of the described embodiments can be practiced without departing from the scope of the invention as set forth in the claims.
