[Italy] The group buying model is proving incredibly popular right now. It seems that not a week passes by without another Groupon clone being launched – we have exclusive news coming tomorrow of a new London offering about to launch – but what if vendors themselves could easily add group buying to their own destination sites rather than relying on a third-party aggregator?
That’s the idea behind by SyncFu, a new side project from the two founders of Europa finalist Aleveo, the social network that lets students connect and exchange ideas with companies.
After conducting research into the Groupon model, Dejan Strbac and Chiara Cicenia, both MSc students of business at Politecnico di Milano, concluded that group buying should happen at the vendor’s own web site. Not only is it the place where customers are already likely to arrive after searching for a particular product but it enables the vendor to build a more direct relationship with the customer and also add authenticity to any discount on offer. It also cuts out the middle person (aside from SyncFu themselves) and any associated fees, which Strbac says can be as high as 20-50% of each sale.
Instead, SyncFu plans on charging customers a micro-payment – between $1-3 – via their mobile phone (SMS) or credit card as part of signing up to the offer or more accurately making a pledge to take part since they are still free to walk away even after the offer has expired. The idea is that by taking a micro-payment from prospective customers it increases the reliability of each pledge, but it’s also a convenient and clever way of SyncFu to make money themselves.
The way each offer works is as follows: After signing up for a SyncFu account, the vendor sets a starting price point for each offer and then specifies how they want the price to drop as more and more customers make a pledge. In this way the price of each unit drops proportionally with each reservation, according to the quantity/price relation that the seller sets. They then embed the SyncFu widget/button on their own website so that customers can begin the group buying process.
After a customer makes a pledge, including being charged that micro-payment, they are issued with a discount code that can be tied to a vendors own e-commerce system or used in-person or via an email generated by SyncFu, ready for the order to be fulfilled once the group buying offer has expired. Allopass, the micro-payments system used by SyncFu works in over 50 countries.
Strbac says that they have identified two types of customer that typically arrive at a vendor’s website. Those that do not care that much about the price but want to make a purchase immediately, and those that are searching the web to find the most competitive price. SyncFu’s group buying widget, which visually seems to make the group buying process feel awfully complicated, is designed in particular to serve the latter.
Since SyncFu has only just launched and on a zero marketing budget – Strbac and Cicenia are completely bootstrapped – it’s yet to sign up any customers. Strbac say that whilst they are targeting the 50+ companies that SyncFu will work in, in particular they see emerging markets as a good fit since group buying is yet to take off in many of those countries. On that note, the startup says it’s currently working with Apple distributors in Serbia to offer group buying for high demand products such as MacBooks and iPods.