Group Buying Websites have begun to Innovate and Differentiate their Services to Sustain themselves in The Long Run. But is there Enough Demand at The Outset?
When Andrew Mason, a 29-year-old music major from Northwestern University in Chicago, was looking for a suitable appellative for his company, he hit upon two words, group & coupon, to coin Groupon – the name of his deal-of-the-day website. The internet business start-up was set up in 2008 with the idea that it’s possible to harness the collective purchasing power of a group. This innovative approach to e-commerce has brought millions of dollars in new revenue to local businesses while saving more than $1.5 billion for consumers around the world. Some tech analysts call Groupon “the world’s fastest-growing company”; it has already amassed 70 million users in more than 500 markets globally, including India, where it debuted early this year.
For daily deals/group buying sites like Groupon, it’s a ripe time to enter India, where the online coupon market is estimated at $120 million and is growing 37% year on year. Also, with about 100 million internet users, of which 20-25% have broadband access, analysts believe e-commerce in India has reached an inflection point and is just about taking off. According to a recent report of Internet and Mobile Association of India (IAMAI), the Indian e-commerce market will gallop at an impressive growth rate of 47% to over Rs.46,520 crore in 2011. The report also highlights that areas like e-retailing are predicted to grow by 62% and touch Rs.2,700 crore this year. E-tailing, which includes purchases of durable products such as electronic items, home and kitchen appliances, as well as personal items like apparels and jewellery, constitutes 8% of the overall e-commerce market in the country. No wonder that more than 20 group buying sites or daily deals aggregators are already active in the country, including SnapDeal.com, Dealsandyou.com, mydala.com, Taggle.com, Buzzintown.com, Koovs.com, DailyDeal.in, Dealivore.com, Khojguru.com, Thekha.com, Scoopstr.com, 24hoursloot.com, Masthideals.com, SnatchDeals.com, Lootmore.com, 30Sunday.com and bindasbargain.com.
However, most of these sites have very little differentiation from one another. According to audience measurement website Vizisense.com, there was no huge difference in the number of unique users who visited mydala.com (1.07 lakh) and bindasbargain.com (1.9 lakh) in December, 2010. Also, there are chances that in the absence of any differentiator and the fact that the type of service offered by most of the daily deals sites is almost the same, websites are getting duplicate traffic. Promoters of group buying sites are realising that it’s not as easy a market as they expected it to be. Already, issues related to less sales margins, attrition of sales force and unhappy merchants are becoming difficult to avoid.
But a visible yet slow transformation is taking place among the Indian group buying websites, which are now jumping in the race to become a one-stop shop for all services and products. Deal sites are now looking to scale up by offering not just discounts for service categories like travel, beauty, health, and dining, but also through inclusion of products from popular categories like computer peripherals, electronics and apparels as well. Knowing that the proliferation of copycats might be the sector’s downfall, some sites are making efforts to get into new lines. For instance Koovs plans to offer health care packages in partnership with Apollo Hospitals and Nova Medical Centers.
When Andrew Mason, a 29-year-old music major from Northwestern University in Chicago, was looking for a suitable appellative for his company, he hit upon two words, group & coupon, to coin Groupon – the name of his deal-of-the-day website. The internet business start-up was set up in 2008 with the idea that it’s possible to harness the collective purchasing power of a group. This innovative approach to e-commerce has brought millions of dollars in new revenue to local businesses while saving more than $1.5 billion for consumers around the world. Some tech analysts call Groupon “the world’s fastest-growing company”; it has already amassed 70 million users in more than 500 markets globally, including India, where it debuted early this year.
For daily deals/group buying sites like Groupon, it’s a ripe time to enter India, where the online coupon market is estimated at $120 million and is growing 37% year on year. Also, with about 100 million internet users, of which 20-25% have broadband access, analysts believe e-commerce in India has reached an inflection point and is just about taking off. According to a recent report of Internet and Mobile Association of India (IAMAI), the Indian e-commerce market will gallop at an impressive growth rate of 47% to over Rs.46,520 crore in 2011. The report also highlights that areas like e-retailing are predicted to grow by 62% and touch Rs.2,700 crore this year. E-tailing, which includes purchases of durable products such as electronic items, home and kitchen appliances, as well as personal items like apparels and jewellery, constitutes 8% of the overall e-commerce market in the country. No wonder that more than 20 group buying sites or daily deals aggregators are already active in the country, including SnapDeal.com, Dealsandyou.com, mydala.com, Taggle.com, Buzzintown.com, Koovs.com, DailyDeal.in, Dealivore.com, Khojguru.com, Thekha.com, Scoopstr.com, 24hoursloot.com, Masthideals.com, SnatchDeals.com, Lootmore.com, 30Sunday.com and bindasbargain.com.
However, most of these sites have very little differentiation from one another. According to audience measurement website Vizisense.com, there was no huge difference in the number of unique users who visited mydala.com (1.07 lakh) and bindasbargain.com (1.9 lakh) in December, 2010. Also, there are chances that in the absence of any differentiator and the fact that the type of service offered by most of the daily deals sites is almost the same, websites are getting duplicate traffic. Promoters of group buying sites are realising that it’s not as easy a market as they expected it to be. Already, issues related to less sales margins, attrition of sales force and unhappy merchants are becoming difficult to avoid.
But a visible yet slow transformation is taking place among the Indian group buying websites, which are now jumping in the race to become a one-stop shop for all services and products. Deal sites are now looking to scale up by offering not just discounts for service categories like travel, beauty, health, and dining, but also through inclusion of products from popular categories like computer peripherals, electronics and apparels as well. Knowing that the proliferation of copycats might be the sector’s downfall, some sites are making efforts to get into new lines. For instance Koovs plans to offer health care packages in partnership with Apollo Hospitals and Nova Medical Centers.
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Source : IIPM Editorial, 2011.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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