Group buying on the Internet is simple. If certain number of people sign up for an offer, then the deal becomes available to all. If the predetermined minimum is not met, no one gets the deal. This reduces risk for retailers

Social networking has not only brought us closer to other likeminded people, but it has also helped us to share our thoughts in a big way. Following the wild success of social networking, some entrepreneurs are trying to explore the power of collective purchasing over the Internet. Over the past six months, many websites have come up with the group buying idea. Just two months ago, two such sites were bought over, while the third one received funding from venture capitalists.

Bengaluru-based Taggle Internet Ventures Pvt Ltd - which received a funding commitment for $8.75 million, based on certain milestones - from Greylock Partners and Battery Ventures, runs taggle.com. The site empowers customers for smart and group buying over the Internet.

According to Juhn Kuruvilla, founder and chief executive, Taggle, in many States like Gujarat and West Bengal, people have been using group purchasing power. Taggle is just offering it over the Internet, thus, there is unlimited scope for likeminded people to come together and buy in a group.

Earlier in 2008, US-based Groupon launched its operations. Today it is the largest deal-of-the-day group in the world operating in over 40 markets besides the US and Canada and has estimated revenues of about $350 million.

The BMI India Retail Report for the third quarter of 2010, forecasts that the total retail sales will grow to $543.2 billion by 2014 from $353 billion in 2010. This gives other retailing formats, like online sales, a huge opportunity for growth in India.  

According to the Taggle chief executive, out of India's total organised retail market, about 15% is discount business. Out of the total branded products sold in the country, about 45% are sold at discounted rates with retailers offering 25% to 80% discounts.

Mr Kuruvilla said that about eight months ago, some 20 people from Gujarat bought cars from Mercedes-Benz at a good discount. "Group buying offers benefit to both customers as well as vendors. While buying in group offers the customers more discount, the vendor is assured of more sales. Taggle is just bringing them together and facilitating the process," he added.

Group buying on the Internet is simple. If a certain number of people sign up for the offer, then the deal becomes available to all. If the predetermined minimum is not met, no one gets the deal that day. This reduces risk for retailers, who can treat the coupons as quantity discounts as well as sales promotion tools.

Taggle also leverages the Internet and more specifically, social and mobile networks, to create a community of shoppers who come together to give merchants volume business in return for bulk discounts. This way, merchants are guaranteed a minimum number of customers who pay less as part of a mass-buying plan, the company founder said.

Taggle.com, launched on 23 June 2010 in Bengaluru has worked with leading brands like Jet Airways, VLCC, Kaati Zone, Casa Picola, The Paul Hotel and 70 MM to name a few. Within six weeks of its launch, Taggle has gathered a fan base of over 1.1 lakh on Facebook, out of which about 15% have turned group buyers on the portal, Mr Kuruvilla said.

He said, "We will launch our service in Mumbai on 1st October. Next on our radar is Chennai, the most conservative market in the country. Taggle will roll out its services in 10 cities, including Mumbai and Chennai, over the next 12 months."

Right now Surat Diamond Jewellery is offering 50% discount on a select range of gold and diamond jewellery at taggle.com. The offer went live from 10th August and is on until 15th August, on a limited number of pieces.

Taggle offers group discount on various items and services. For any item, a minimum number of buyers are required to make an offer go live. All the buyer has to do is click on the 'buy' button, which preauthorises the purchase. However, unless the offer receives response from a minimum number of buyers, the purchaser will not be charged a single penny. Once the offer goes live then the payment is made to the vendor, who in turn initiates the delivery process.