My friend and I are building a 'we'-commerce platform (http://hopponit.com). We are aware that a couple of very well-funded startups (namely Mercata, funded by Paul Allen, and Mobshop, co-funded by Marc Andreessen) have failed in this area. However, there's plenty of academic research on this topic. Do you believe that a group buying service can be made valuable? If so, I'd love to read your thoughts on 'how'.
Group buying might be the wrong model.<p>What if, instead of focusing on products (which might have been mercata's downfall?), we focus on pooling money for the local community? It's a fundraiser service, except the service will also take care of several loose ends.<p>(1) people bid real money to get something done in their local community (fix potholes, install solar panels, bring music bands into their local bar, whatever).<p>(2) the service builds web tools to help the community discuss options and reach a consensus about a solution<p>(3) people can opt out at any time until the proposed solution (reached via community vote) gets implemented (by contracting out or whatever). This gives the users the power of choice.<p>($) the service primarily makes money when fundraising communities can reach a consensus. There are also infinite possibilities for making deals with meat world service providers (construction contractors etc) at a large scale. Also, the money that users pledge will actually be deducted from their accounts and held, accruing interest, until the user opts out or a solution is reached.
A friend of mine is part of the team at groupon.com, which is a great group buying site. They've been extremely successful because they've managed to know and target their prime demograpic perfectly. Also, they localize their deals to a city, so that you're buying things like teeth whitening sessions and dinners at fondue restaurants.<p>But the key to their success has been their customer / market validation, and the singleminded pursuit of their target demographic (which is itself interesting, as they're targeting 25-40 y.o. females in a high socioeconomic class).
If you can get the price significantly below the lowest price people can find online, and it's not too inconvenient to use your site, then yes you can have a successful group buying service. I'm not sure how feasible that is, because the things people are most likely to buy online in a group are electronics, computers, phones, etc., and the margins are already so thin you'll have trouble beating buy.com, newegg, and amazon.