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Group Buying Clubs
There are several companies on the Internet that use a rather unique method of selling product. Called group buying clubs, these companies attempt to sell products for discount prices by grouping together hundreds of individuals who want to buy the same thing. In some ways, they are like online "warehouse stores". The more people who want to buy a given product, the lower the price generally goes. Some of these companies will actually send you email when the price drops on the item, as more buyers join in. Companies using this sales model include Mercata and Mobshop.
This selling method is quite ingenious: it makes sense that if a company can approach a vendor with say, 200 buyers already committed, it can get a better price than if only buying the items five or ten at a time. When it works, you can save money. Unfortunately, some people assume that these companies will always be lower than vendors who sell in more conventional ways, and that's not always true. Don't get "drawn in"--make sure you check prices at different sources.
In terms of advantages and disadvantages, these stores are very similar to the large online vendors. They compete almost exclusively with the established large vendors through the allure of lower prices; otherwise, they have the same strengths and weaknesses, so I won't repeat those lists here.
Compared to more conventional ways of buying things, these companies have a couple of significant drawbacks. The main one to is that selection is much worse than that of regular vendors--the only way they can get enough buyers to make the "more buyers, lower cost" model work, is to seriously limit the choices they offer. For many types of goods, only a single product or perhaps two choices will exist. Another key drawback is that you will usually end up waiting longer to get the item than you would from a conventional seller.
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