A Path Analysis of Online Group Buying

Online group buying has emerged as a new bargaining power for many shoppers and become more so as a result of increasingly growing popularity of social networking and community-based web sites. Aside from significant quantity discounts, these buying groups can also potentially influence the manufacturers and retailers on policies, product characteristics, and services. We propose an Online Group Buying Decision Framework to model the overall process of online group buying. We use a major group buying community web site in Taiwan, ihergo.com, to test our framework and conduct follow-up analysis. Based on the proposed framework, we design a survey study in an attempt to gain more insights on group buying communities, their activities, and culture within these communities. We then perform a path analysis, a special technique of structural equation modeling (SEM), to study the relationship among the factors used in the survey. Our findings provide useful advice for online group buying sites to attract customers and increase sales.