With large scale businesses rushing to jump on the B2B exchange bandwagon driven by the Internet, it was only a matter of time before a company offered consumers the chance to leverage collective buying in the retail market.
CoShopper.com is the first site in Australia to offer consumer group buying discounts. The site, which was launched last week, promises consumer savings of up to 30 per cent on street prices, depending on how many customers buy the product.
"It is a simple concept - consumers buying together makes things cheaper," said CoShopper Asia Pacific managing director Chris Lane. "In the off-line world this is quite hard to do; the time and cost involved makes it impracticable."
The CoShopper cycle integrates four steps - attract a coshopping community, source the products they nominate, offer bulk discounts and facilitate the transaction.
Australia is the 10th CoShopper community to go live around the world and the company has plans to launch more sites in Asia in coming months.
CoShopper.com monitors the retail prices of its stock, taking an average to determine a "street price". The items are generally displayed for two weeks to determine the number of buyers - a process referred to as "cycle time".
"Our model is based on cutting out as many middlemen as we can," explained Andrew Coates, country manager for Australia and New Zealand.
Coates said this time would decrease as the model became more popular. CoShopper sources products both directly from vendors and through distribution channels.
The site has already run into competition from e-tailers such as buy.com which was offering a Nokia mobile phone for less than the maximum discounted CoShopper price.
"In some instances, we don't put products on the site if the street price is less than we can offer. We only offer products to consumers if there is a discount available," Coates said, adding that while loss leading business models can work in the off-line world by driving customers into the store, they could not be sustained online.
The site has proven most popular with computer hardware and peripherals, which also afford the quickest discounts.
"High value items such as laptops only take around five people to get the best price, whereas lower value items can take up to 20 people," Lane explained. "It is the flip-side to an auction, where the more popular the site becomes, the more likely the price is to increase. This is a buyer's market."
CoShopper hopes to drive customers to the site through affiliate partnerships and word of mouth, rather than spending big money on advertising.