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July 14, 2006
The power of information -- amplified buying power
Earlier this week, I posted a comment on how advanced communications and information processing could boost economic arbitrage - The power of information -- faster use of friction.
The power of information extends to other parts of the buyer-seller relationship, as well, as illustrated by a recent Economist story "Chinese consumers are ganging up on their retailers":
On an otherwise quiet Friday afternoon in Guangzhou, a city in southern China, 500 shoppers gather outside a Gome electrical superstore in the downtown district. They arrive en masse at the designated time—June 16th at 4pm—that they had previously agreed online. Several hours later, they emerge clutching boxes, having secured 10-30% discounts on cameras, DVD players and flat-screen televisions. “It was great,” says Fairy Zhang. “We just bought an apartment and this way we can afford nice things for it.” The previous weekend, over 100 locals visited Meizhu Central, a well known furniture outlet, to haggle over the prices of kitchen cabinets and dining-room furniture.
Tuangou, or team buying, aims to drive unprecedented bargains by combining the reach of the internet with the power of the mob. It is spreading through China like wildfire. The practice originated in online chat-rooms but has quickly inspired several specialist websites, such as 51tuangou.com and www.teambuy.com.cn. Zhang Wei, who helped to set up teambuy less than six months ago, says the site has 10,000 registered members. The company plans to expand into Beijing and Shanghai.
Sounds to me like asymmetrical buying power - not "frictionless commerce." If you are part of the mob, based on your access to information (and ability to be at the right place and the right time), you get the discount. Otherwise, even if you know about it, well, tough luck.
Just another example of how the I-Cubed Economy is evolving in unexpected, but traditional ways. As the Economist points out, "team buying turns haggling, a tradition in China, into an art-form."
The more things change . . .
Posted by Ken Jarboe at July 14, 2006 9:36 AM
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