Singapore Shopping Groups Form to Buy Lobsters, Tarts Amid Covid

(Bloomberg) -- Every week, Singapore healthcare worker Toh Lixin offers about 4,000 of her neighbors the chance to get discounts on items such as fruit tarts, bottled coffee and baby lobsters. Toh, 26, is the organizer of an informal network of consumers who use Telegram, WhatsApp and Instagram to organize group purchases. She started the group last October and usually gets around 50 weekly orders. 

Since the start of the pandemic, Singaporeans like her have launched at least 20 group-buying communities. Residents in Bukit Panjang, a neighborhood in the northwestern part of the island, can have baby lobsters delivered for just S$24 ($17.60), which can be half of what restaurants downtown charge. While most groups focus on food, some larger group-buy networks offer household items such as cleaning supplies.

Hosts, the local residents in charge of the groups, negotiate with businesses on prices and customers collect the items, often from the hosts’ homes. Groups can whittle down delivery fees, which initially can be as high as S$18, to only a few cents per customer, and hosts can negotiate discounts as high as 30%. Toh charges a S$2 administrative fee per order, and customers pay the hosts via mobile banking.

Buying through bulk purchases is a permanent way of shopping in other countries. In China, such buying groups have support from e-commerce companies such as Pinduoduo Inc. But in Singapore, the business has grown from the grassroots, with tens of thousands of members in informal networks set up by members of the public. The groups have gained popularity during the pandemic, when visiting physical shops can be challenging because of social-distancing restrictions.

The groups may also be a sign of a broader shift in Singaporean consumer behavior as more shoppers go around intermediaries like retailers and distributors and instead place orders directly with producers, according to Daniel He, assistant professor at the National University of Singapore Business School.

“What makes the latest iteration of group buying revolutionary is that it exemplifies a new business model, known as customer-to-manufacturer,” he said. Businesses like the model because it guarantees sales volume at a time of economic uncertainty, said He. “C2M as a business model is likely here to stay.”

As some groups expand rapidly, they face logistical and manpower difficulties. Some hosts have started using paid platforms to facilitate their operation. “It is easy to collect orders, to collect money, but when a lot of money come in at the same time, it becomes difficult to manage,” said Sunny Tan, co-founder of e-commerce solutions platform UnitySuite, which charges monthly fees of S$59 for basic services such as consolidating orders and managing inventory.

During the pandemic, there’s more to group-buying than convenience and savings, said Christine Quak, a public-relations agency owner who makes at least four group-buy purchases a week. Her condominium estate of more than 700 units promotes one or more group-buy listings a day and products range from fresh vegetables to imported pineapple pastries. 

“It is also about paying it forward,” Quak said, “helping our businesses during these tough times.”

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