Social Group Buying as a Marketing Strategy

Abstract

Social group buying (SGB) is a novel form of group buying that encourages customers to purchase deeply discounted products together with friends. Over the past few years, SGB has become a popular marketing strategy for online sellers to acquire new customers. Using a dataset from an e-commerce platform, we investigate whether and how SGB affects the sales of sellers. We find that enrolling a few products into SGB has a positive spillover effect on the sales of the sellers’ other products, and the effect varies substantially across different types of sellers. Specifically, the positive spillover effect is larger for smaller sellers and more diversified sellers. Moreover, we find that the spillover effect exhibits similar heterogeneity at the brand level, except that it can be negative for large brands and non-diversified brands. This finding suggests that sellers may gain from SGB at the expense of large or non-diversified brands.