Group Coupons: Interpersonal Bundling on the Internet

Yongmin CHEN, Tianle ZHANG

Research output: Working paperWorking paper series

Abstract

Sellers sometimes offer goods for sale under both a regular price and a discount
for group purchase if the consumer group reaches some minimum size. This selling practice, which we term interpersonal bundling, has been popularized on the Internet by companies such as Groupon. We explain why interpersonal bundling is a profitable strategy in the presence of demand uncertainty, and how it may further boost profits by stimulating product information dissemination. Other reasons for its profitability are also discussed. We provide sufficient conditions for interpersonal bundling to dominate separate selling, and identify factors that determine the size of its profit advantage.
Original languageEnglish
DOIs
Publication statusPublished - Sep 2012
Externally publishedYes

Publication series

NameNET Institute Working Paper Series
PublisherThe Networks, Electronic Commerce and Telecommunications ("NET") Institute
No.12-09

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  • Cite this

    CHEN, Y., & ZHANG, T. (2012). Group Coupons: Interpersonal Bundling on the Internet. (NET Institute Working Paper Series; No. 12-09). https://doi.org/10.2139/ssrn.2164366