Sunday, September 25, 2005

Characteristics of Group Purchasing

Characteristics of Group Purchasing.

This question refers to group purchasing which is defined as “quantity purchasing that enables groups of purchasers to obtain a discount price on the products purchased” (King, D. Electronic Commerce 2004, p. 15). This is about how EC has spawned the concept of demand aggregation, wherein a third party finds individuals or small to medium enterprises or SMEs, aggregates their orders to get a large quantity, and then negotiates (or conducts a tender) for the best deal.

Large companies usually have such great deals because they often large quantities. They command lower prices. According to the textbook, a few Web sites sprang up in the first part of the Internet Economy to bring together small businesses with common purchasing needs and enable them to get the same discounts and customer privileges as corporate customers. They are aggregators known as, and Group purchasing represents the B2B buy-side marketplaces (one buyer from many sellers). Companies such as take advantage of the opportunities offered by the Internet to create economies of scale for small businesses. Writing for Nashville Business Journal, Jeremy Heidt said the following about, “The San Jose, Calif.-based business-to-business Internet company is aiming to create economies of scale for small businesses around the world by combining their purchasing power to get volume discounts usually only available to large corporations.”

I tried hard to find and After entering the Web site into the URL, I got to what appears to be a front page with some information about the “Unique E-Commerce Partnership Opportunity” the business represents. The info can be interpreted as a promotional pitch to recruit any potential franchise partners. invites surfers to request more details. claims to have successfully served shoppers in the UK, Germany and Sweden since 1998. The company has plans to expand throughout Europe. Since there was no note of temporary take down for maintenance, I can safely state that it may be a pure brick and mortar company that is trying to have an online presence. Furthermore, does not exist either.

According to a February 11, 200 print edition of Nashville Business Journal, “Shop2Gether needs to reach a ‘critical mass’ of one million buyers in 2000 to meet its business model’s projections of success” ( online edition). At the time of this printout, the site had less than 50,000 buyers and more than 200 vendors or suppliers. We all know about the Internet bust that year. If it survived, I was unable to locate it on the Internet. So there is not much to compare Buyerzone to.

I prefer because it’s easy to navigate, user-friendly and meets real marketspace needs. It’s a true B2B company. “Since 1992, BuyerZone has helped hundreds of thousands of buyers successfully purchase products and services for their businesses” (, accessed on 9-23-05). All potential buyers have to do is to complete an online Request-for-Quote form for the product or service they wish to purchase for their business. Then, the buyers’ information gets verified and matched to the appropriate sellers by technology and personnel. Matched leads are e-mailed to buyers as soon as a quote is posted. Customer Service Care is also provided. Some of the biggest names in B2B, B2C, B2E are among BuyerZone’s clients: eBay, Coldwell Banker Properties, A.G. Edwards & Sons, Inch, Agilent Technologies, AOL Time Warner, AT&T, Bank of America, Boeing company, Blue Cross Blue Shield, Cargill, Capital One Bank, CNET Networks, Inc, Eastman Kodak, Exxon Mobil, Federal Aviation Administration, Kaiser Permanente, General Dynamics, Honda, Hitachi, Honeywell, ING Barings, Johnson & Johnson, Kmart, Oracle, Mattel, Maybelline, Microsoft, Motorola, NASA, Olympus, Procter & Gamble, Raytheon, General Electrics, Merck, Polaroid, Geico, Fujitsu, Real Networks, Siebel Corporation, Samsung, Sallie Mae, The City of Philadelphia, The United Nations, the State of Michigan, U.S. Air Force, U.S. Army, U.S. Coast Guard, U.S. Department of Commerce, U.S. Department of Defense, U.S. Department of Justice, U.S Federal, U.S. Department of Treasury, U.S. Environmental Protection Agency, Stanford University, Sycamore Ventures, Sara Lee Corporation, Sandia National Laboratories, American Express, Highland Financial, Johns Hopkins University, Merill Lynch, and various prominent national universities.

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