In May 2013, Tesco partnered with buyapowa to launch Wine Co-Buys – a group buying program which enables people to refer friends to buy cases of wine at better prices. The model relies on the power of people’s networks and on Tesco’s commitment to deliver genuine value.
Marketer India Warman wrote:
“All retailers are battling to come up with innovative ways to attract customers at the moment. With online sales being so high and customers dictating how they want to buy, Tesco may have got the right idea!”
Through the Wine Co-Buys, Tesco shifts some power to the people, giving them more control over the product pricing and a say in which products should be included in the next Co-Buy.
According to Social Commerce Today’s Paul Marsden, the program is an example of “social commerce for the empowered customer”:
“What we particularly like is that it appears to be demand led; customers are able to choose wines they want to buy together in bulk – and set a maximum price they’d be willing to pay. The more people that sign up, the heavier the discount – with the person who recruits the most co-buyers – via social sharing – getting a case of wine for free. Sweet.”
Tesco announces upcoming Wine by the Case Co-Buys on its website and invites people to sign up for an email notification. Once a Co-Buy goes live, people can go to the buyapowa website and “join” the Co-Buy. People enter their name, address and payment details, pay a £1 joining fee, and commit to purchasing the case of wine at the final price achieved by the Co-Buy.
The starting price for the product is already discounted, and people drop the price lower by inviting friends to participate in the Co-Buy and purchase the product.
As Alex Lawson pointed out:
“Shoppers commit to a maximum price but the price point falls as the number of people that purchase the product increases.”
Mommy blogger Leanne Amy explains “how the ‘prices drop as people shop’ thing works”:
“There are three price drops, and the obvious goal is to get enough people to join the co-buy that the third price drop (and therefore the lowest price) can be achieved.
“Typically, there will be 100 units of each product to be sold. If between 1 and 24 people join the co-buy, they will pay BuyaPowa’s starting price for the item (which is already lower than RRP). Once more than 25 people join, the price will drop some. At 50 people, it will drop again. At 75 people (up to 100 when the items sells out), the third price drop will happen and everybody receives the product at BuyaPowa’s best price.”
The number of participant slots for the Tesco Wine Co-Buys varies from 25 to 150, depending on stock. As a result, most Tesco Wine Co-Buys last only a few hours. At the end of a Co-Buy, Tesco issues participants an eCoupon which they can use to buy the specified case of wine at the best price achieved. The eCoupon includes a further £1 discount, to make up for the joining fee, and must be redeemed within two weeks.
Tesco encourages people to use the power of their networks with more than just the price drops – the person to refer the most number of friends in the least amount of time “Wins the Co-Buy” and receives the case of wine for free.
The leading participants are featured on a public leaderboard, increasing the sense of competition between players and egging them to recruit more friends.
To further widen its reach, Tesco recently introduced the “Share to Win” feature, which allows people participate in “Win the Co-Buy” without actually placing an order. This feature seduces people with large social followings to promote the Co-Buy without making a commitment to buy. In the event of a tie, the paying participant would take priority over the “Share to Win” participant.
Blogger beccacaddy wrote:
“This means there’s also quite a big social element to Buyapowa, as users are encouraged to get more people to buy the product they want. No matter how sneaky you might think that is on Buyapowa’s part, you can’t deny it’s a pretty clever selling tactic, get someone else to promote the products on your site for you.”
People can also use the power of their network to request products for future co-buys. Tesco’s rules note:
“When three or more people nominate a product they would like to buy in a one-week period, we will immediately get to work on their behalf to see if we can create a Co-buy deal, and we will always do our very best to make it happen.”
Tesco promotes the Co-Buys through its blogger network of Tesco Wine Ambassadors and its own online wine community. At the launch of the platform, the ambassadors introduced and explained the concept of Co-Buys in their blogs.
Tesco community managers typically announce the individual Co-Buys on the Tesco wine community blog. But with the steep competition and short timeframes, community members now make the announcements to ensure their friends – and referrals – get the chance to participate.
The success of the Co-Buys rests heavily on Tesco’s commitment to deliver genuine value.
Potential participants are typically skeptical of the claim of “best price,” as community member Aimetu pointed out:
“I’m just not sure about this – the lowest prices depend on purchasers but I’m sure the low prices have been available at various times throughout the year or various promotions.”
Tesco’s community manager Charlotte Stebbings was quick to counter:
“We ran an offer on Jackson Estate Stich Sauvignon Blanc in March of this year with a promotional price of £54 for a case of 6. The final price of the latest Co-Buy at £45 for a case of 6 is significantly below this and is a fantastic price for a wine of this quality and reputation.”
The concept of group buying was previously introduced by deal sites like Groupon, which tend to focus on services. buyapowa, on the other hand, focuses on a wide range of products – from household items (Crest WhiteStrips), gadgets (Amazon Kindle) to beauty products (Lancôme mascara, YSL nail polish, Jean Paul Gaultier perfumes).
Mommy bloggers like Sylvestrix applaud the model for making high end products more affordable:
“I originally started keeping an eye on it for household items, but I’m super excited about the potential it has for bringing high end beauty products down to a more accessible level.”
Entrepreneurs and organizations are experimenting with new buying schemes designed to build loyalty. Two examples in the wine category, via Social Commerce Today, are Club W which offers a curated selection of wine every month, and naked wines which invites people to support independent winemakers and become ‘naked angels.’
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