How group buying can change Indian ecommerce? [Media Monday (digital)]

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group buying

Very recently, Snapdeal secured a position among 100 most visited websites in India. This may be a game changer in the sense that it took Snapdeal only 9 months to do it! What’s interesting to know is that Snapdeal has surpassed some of the other popular ecommerce sites like Cleartrip.com, bookmyshow.com, redbus.in and interestingly flipkart.com, sites which took more than 2 years to reach top positions in India. There are other major group-buying websites like mydala.com, Koovs, Wannamo etc but they are yet to compete with Snapdeal. So what made Snapdeal explode in popularity? There are several (hypothetical) reasons for the same-

  • They acquired Grabbon, a Bangalore based group buying firm this June.
  • They are run by Delhi based Jasper Infotech who have good experience in online marketing.
  • The services and unmatched customer focus offered by Snapdeal.com.

Now, this is not something entirely different from what other players are doing. So the only point which stands out is- “There team is really good at it!” Digital businesses are more about creative execution skills rather than the idea.

But why I’m talking about this as a game changer in India’s ecommerce? Let’s have a look-

  1. Group buying may be a universal concept like “Social networking”, but unlike social networking group buying is more about local deal making rather than technology. Hence soft skills combined with local knowledge will always play a big part here.
  2. Many other concepts including “Book buying”, “Movie/Travel ticket buying” etc are universal too, but they are need-based products and hence the margin for websites is very less!
  3. What local businesses learnt fast from their parent site Groupon.com is such kind of product makes sense only for very high margin businesses- Spas, Restaurants, Adventure trips etc i.e. Lifestyle products.
  4. Due to the target segment i.e. lifestyle products the TG (target group) came naturally to these websites. Major internet users are those who like to get indulged in such deals and if you combine it with discount coupons for inviting friends, it can really go viral.
  5. Competition in this area may be huge at start due to very low entry barrier, but because of the kind of business i.e. local understanding of market it’s very hard to survive in longer run. Hence only the best can grow in this business.

Because of a direct revenue model, companies can actually make huge money in short term. Gone are the days when web companies kept on speculating the revenue model! It’s the time when Snapdeal is saving Rs. 3 Crores per day for it’s clients (you can assume the kind of money they are making with every deal) and Groupon is worth more than a billion dollars in just 2 years!

Do you think Snapdeal can go on to become India’s fastest billion dollar Company?

  1. Ankit Agarwal says

    “The target audience comes naturally to them” ??? Are you sure. The biggest beef investors and analysts have with deal based sites is insane customer acquisition costs. With new deal sites sprining up by dozen, the acquisition costs are only increasing. Also, the current margins are high especially for someone like Snapdeal (frontrunner and all that). But is that sustainable? I doubt that.

  2. Shatrughan Sinha says

    SnapDeal is also indulging in unethical practices. They inflate the discount figures rather brazenly. Sooner or later customer is going to learn of it

  3. Pradeep G. says

    I have worked with a so called leading group buying website. The reality is that they are spending their money like anything but their sales figures too less to give them any profit. No group buying website in India is in profit till date. I have a model that might suit to Indian market. Mail me at strings307@yahoo.com if you want to start any group buying website or need any advice.

    1. rabi gupta says

      Hi Pradeep,
      Thanks for the insight! That indeed puts some real picture in front :)

  4. jignesh says

    i totally agree with you.

    satisfying both the customer and the suppliers is important to any business

  5. Jitendra says

    snapdeal has become good as it had given the visitor what they wanted.
    Another reason was that user wanted to try new things, but dont want to sell much

  6. Abhinav says

    Are group discount sites really doing well in India? My view – based on the # of coupons I see them selling – is that they aren’t doing that well.

    Snapdeal does not even share how many coupons its sold. Which is odd because if they’re doing as well as everyone says they are, then they should be shouting the number from rooftops.

  7. Rahul Rao says

    I read someplace that SnapDeal’s managed to help customers save Rs. 3 crores until now. Per day seems like an awesome number.

    Either way, good to see these companies do well.

  8. Indian Blogger says

    The new daily deals site in India, CityOffers has started with this unique feature called Prepay Wallet. To buy deals from the site instead of filling in your credit card, debit card details every time ,one can add money one time in their Prepay Wallet and then he/she can use that money till he/she is out of it. One can think of it like a prepaid mobile card.So if you put in Rs 1000 today you can use it till you buy the coupons worth Rs 1000

  9. Nimish Adani says

    You missed the gun. Their eBay deal has got to do a lot with their success. That is what got them going. Smart alliance.

    1. rabigupta says

      Hey Nimish, Thanks for commenting!
      Can you give some more details or a link for same?

  10. Jai Anand says

    Snapdeal is doing good, but there’s lot more challenge to come to all these group buying sites including mydala,dealsandyoukoovs,taggle,dealmagic,sosasta,scoopstr,buzzintown.
    Its still not a great revenue generating model, real price of the product that they show are generally not the real price, they are prices of over-priced stores so eventually people save very little, its not like saving 70-80%, it hardly saves 20% for a customers. Offline stores promotion has never been true, what you show is not always what you get, online promotion is what real discount is all about.
    Offline store promotion is limited, you dont need spa everytime, you dont need haircut everytime, you dont need holidays, you dont need gym membership everytime. Customers are limited for these stuffs and so when it combines with limited services, it converts into a limited model.

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