Buyers’ purchasing time and herd behavior on deal-of-the-day group-buying websites

Liu, Yi and Sutanto, Juliana (2012) Buyers’ purchasing time and herd behavior on deal-of-the-day group-buying websites. Electronic Markets, 22 (2). pp. 83-93. ISSN 1019-6781

Abstract

Since its introduction 10 years ago, group-buying websites, where buyers with similar purchase interests congregate online to obtain group discounts, have metamorphosed into several variants. The most popular variant is the deal-of-the-day group-buying website, where there is only one product/service being offered each day. Starting in the United States in 2008, this new group-buying variant has rapidly achieved tremendous success and has been widely adopted in various countries. At the end of August 2010, there were more than 1000 deal-of-the-day group-buying websites in the most competitive online marketplace, i.e., China. How exactly do buyers behave on these websites? How can deal-of-the-day group-buying website providers take advantage of buyers’ behavior? Based on herd behavior, we collected and analyzed over 500 hourly orders on the most popular deal-of-the-day group-buying website in Beijing. We found that auction times and new orders for each hour have an inverted-U relationship. Moreover, we discovered that the number of existing orders will only have a positive effect on the number of new orders during the first half of the day. Contributions to research and implications for group-buying website providers are presented in the paper.