Will group buying be the Internet’s next big thing? Could group-buying websites be to the 2010s what Google and E-Bay were to the 2000s? The future will tell but one thing is for sure: group buying is now a trend marketers must take into account.

The practice of buying articles in bulk to get a better price per unit is hardly new. Yet it is fairly rare for one buyer to need 5 cell phones or 1000 cupcakes. Now, thanks to the power of the Internet, customers seeking to buy the same product can get together and exert their collective power to squeeze better prices out of the seller. The practice originated in China under the name of Tuangou 团购 and is now spreading fast. Websites are appearing that allow customers to join together in exchange for a commission. The biggest of such sites internationally, Groupon.com, just raised $135 million in capital from Facebook backer Digital Sky Technologies.

At first glance, group-buying makes sense. By using such distribution channels, businesses can generate considerable cash flow and are able to reach a large number of customers in just one sale. Even if the operation is unsuccessful (some websites finalize the sale only if enough customers have expressed interest), the company benefits from a free opportunity to advertise its brand and its products.

However, every coin has two sides. Group-buying is quite different from the traditional retail market. Group buying websites are another brand touch point that needs to be considered to prevent inconsistency in brand identity or customer dissatisfaction. The channel used to sell products or services impacts the brand image. So when business choose group-buying model to build or promote brands, they should carefully assess a range of possible risks. Their decision of where and how to sell is of strategic importance for their brand.

For many brands, the customer experience is as important as the product itself. Nobody could imagine IKEA products out of the familiar context we associate them with (the warehouse-size stores, the $1 hot dogs, the cafeteria and the trademark blue bags). For these brands, group buying may not be a smart choice for it reduces the customer experience to a few quick clicks. What is more, with group buying the relationship between the brand and the customer is indirect and the brand has little opportunity to get its message across.

On the other hand, group buying may be a good way to get customers to try out new products. Clients might be wooed by attractive prices and then stay because they like the product and the brand. It all depends on how the brand gets customers to gradually transition to second purchase and then loyalty purchase. Group selling should be seen as the first step of a process that will turn an isolated purchase into a deeper and longer term relationship between the brand and the consumer.

Brands also need to consider- who are their target customers? Are they likely to use group buying websites or not? For example, if a brand is targeting young adults, it is an appropriate choice. However, if they are targeting older or more affluent customers this is not an appropriate channel.

Another issue to keep in mind when considering group buying is the price. While pricing is more of a marketing consideration, price levels impact the brand positioning and thus its image. High prices usually mean luxury while low prices are associated with low quality. One important consideration for brands is whether their presence on group buying websites negatively influences their brand image. For example, should Gucci sell bags on a group buying website? Or is it more for low to mid range goods like daily care items or simple clothing?

All in all, group buying may represent a tremendous opportunity but companies should approach it carefully, always thinking about the long term repercussions their choices have on their brand image.