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

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.

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Correspondence to Yi Liu.

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Responsible editor: Xin Luo

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Liu, Y., Sutanto, J. Buyers’ purchasing time and herd behavior on deal-of-the-day group-buying websites. Electron Markets 22, 83–93 (2012). https://doi.org/10.1007/s12525-012-0085-3

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Keywords

  • Online group-buying
  • Deal-of-the-day
  • Purchasing time
  • Herd behavior
  • Buyer behavior

JEL classification

  • D89