Earlier this week, when China released its economic figures for July, the average cost of goods - or Consumer Price Index - was up 6.5 percent, its biggest increase in three years. Leading the way was an increase in food prices, including a spike in the cost of pork. One of the ways Chinese consumers are coping with the pinch from inflation is by turning to the Internet and shopping in groups.
Group on
From deals on vacations, to hotels, restaurants, food and theatrical performances, group-buying websites in China are offering a dizzying array of deals for web-savvy consumers.
And, the competition online is intense. According to a recent report by Technode.com, an online blog that focuses on tech news and opinions in China, there are more than 1,000 online group buying websites in China.
Wu Bo, the CEO of Lashou, one of China's leading group-buying websites, says the market is developing fast in China and still has room to grow.
“Group buying fits very well with Chinese people's habits, said Wu Bo. "They are very keen on saving money, and are also sharp consumers. And also because of the development of the Internet, it is possible to find a lot of cheap and reliable products on the Internet.”
Coupons
Each day, most group buying websites post batches of coupons from online merchants that offer customers a discount once a set number of people sign up to participate in the deal.
The front page of Lashou's website on Thursday included deals on a dinner buffet and spa at a Beijing hotel, tickets to a marine park in Shanghai and cosmetics.
Most offers advertise at least a 50 percent discount.
Dataotuan.com, a website that analyzes China's massive daily deal community, says Lashou is leading China's group buying market in terms of revenue.
CEO Wu Bo says Lashou went online in March of last year and is now in 180 cities in China, employing more than 6,000 people.
“We often joke with one another and say we can control the Consumer Price Index because our discounts are comparatively lower, and from the consumers' perspective we offer good service and they spend less money.”
In a report on group-buying sales released late last month, tuan800.com said China saw more than $100 million in sales during the first half of the year. And that was just for 17 major group buying sites. Tuan800.com has previously said it expects group buying sales to reach $2.5 billion this year.
Gaining popularity
Zuo Xuan, a 30-year old woman who frequently shops online and has been using group buying sites for several years now, says there is a connection between the rising cost of goods in China and the popularity of online buying.
“I think that with inflation rising group buying became more popular. There definitely is a link there. But I don't think that inflation is the only reason for group-buying's success,” said Zuo.
She says that one of the reasons why group-buying has become so popular with her and others, is because of the boom in online buying that China has already experienced.
“People got used to buying things online and then slowly they turned to group-buying because it's even cheaper,” she said.
However, she says that cheaper and better goods do not always go hand in hand. As prices go down, Zuo Xuan adds, the quality of goods is an increasing concern, and is something she pays close attention to when she shops online.
Penny pinchers
Advice about how to save money is abundant online in China.
One website, Macaoyuan, features a popular posting named 30 Money Saving Tricks, which is geared towards what it calls smart penny pinching women in Shanghai.
Some of its money saving tips include shopping after 9:00 p.m. - a time when it says many supermarkets discount salads, cooked foods, pastries and fruit. When traveling, it recommends staying in university guest houses, which can be cheaper than economy hotels.
Not everyone thinks group-buying and shopping online is the best way to save money.
Tom Shi, who works in the computer industry and is an avid Internet user, says he would rather put his money in stocks. He says few of his friends are frequent users of group-buying websites.
“Perhaps it's because group-buying's influence is just not deep enough yet and its advertising hasn't been dynamic enough to reach those around me,” he said.
However, Shi says some products could pique his interest in group-buying. He says that if computers and other electronics were being sold with big discounts, he would consider group-buying for that.