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Deal or no deal?

03-June-2013
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Deal or no deal?

Deal websites made an entry into India a few years ago, with most of them being based on the lines of international deal website such as Groupon. While these websites promoted the deal culture and provided services on the lines of the international model, they soon had to make changes to suit the Indian consumer and merchant mentality.

Deal website owners soon realised that the Indian consumers were not comfortable with paying upfront before receiving the service. Thus, Indian deal curators such as Sanpdeal and Timesdeal do not require customers to pay the entire amount at the time of purchasing the deal. For instance, if the consumer is getting an INR 500 deal at INR 399, then he/shemight have to pay INR 99 upfront and INR 300 to the merchant post utilising the deal.

Also, Indian merchants listed with the deal curators did not look up to 50:50 revenue share on the discounted price. The average revenue share for Indian deal websites lies between 15 – 35 per cent.

A number of deal websites have crept up in the last two years, promoting the group buying culture. However, from an India perspective, do these websites stand a chance to grow beyond their niche is not known yet.

Is it a winning deal?
Consumers are now beings of power and choice. E-commerce and deal websites in particular give them an opportunity to pick their favourite deal across sectors from a wide array of choices, giving them an opportunity to make informed and educated decisions.

“Coupons are a new addition to the Indian market and even though users are not necessarily accustomed to them yet, the acceptance is growing. The Indian market has a diverse population of deal seekers. This space is actually a platform for location-based offers which need to be either hyper-local or large scale with a granular reach,” said Anisha Singh, CEO and Founder, Mydala.

From street shopping to showroom purchases, bargains and discounts always attract Indian consumers. Deal website click with the Indian surfers on this very point as they manage to provide sophisticated bargains on their portals.

“We sincerely feel that there is strong consumer need that is always on the hunt for best possible deals and bargains on things he wants. Over last two years, our experience in this domain has been that there are more and more consumer who are getting into habit of checking new deals every day,” said Ninad Takpere, Business Head, Timesdeal.

While deal culture has been picking up and striking a chord with certain kind of audience, they still face a hard spot in the e-commerce zone.

Facebook initiated its coupon feature in India in mid-2012. For reasons such as the social nature of the website and slow penetration of its native advertisements and offers, the coupon feature did not pick up.

“Somehow the Indian audience is more inclined towards checking the shopping portals daily for offers or they receive regular communication from the shopping portals in the form of emails mentioning exclusive discounts. For a major segment of the Indian audience, Facebook is just a social networking site and not a real-time shopping and marketing portal,” added Singh.

While Facebook’s non-marketing nature is one of the reasons, the fact that the coupon culture faces strong challenges in terms of sameness, dominance of the market place model and technological barriers are too be equally looked at.

Indian merchants are now warming up to the concept of selling goods online. However, offering them as a deal is yet now a known concept. Thus, limited number of merchants lead to same deals, of same nature across portals. Also, deal website owners are in need of more innovation, which should not be driven by only increasing the number of brands and deals on the portal.
Deal curating also requires large-scale investment and heavy resources, leading to a number of deal curators migrating to the deal aggregator or market place model.

“There are and there have been very few deal curators, and most of the players focussed on deal aggregation due to obvious reasons of scale of operation, investments, tech platform etc,” added Takpere.

Snapdeal, one of the pioneering deal start-ups of the country adapted to a marketplace model almost a year ago. Deals form comparatively a very small part of the website now. Reportedly, the deal portal adapted to marketplace due to increasing trust in it the customers started having and also due to the success of market place model seen on other websites. This kind of a tectonic change implies that to grow solely as a deal curator, Indian portals will have to struggle a lot.

Way forward
Most deals websites have now managed to gain a loyal fan base and have also inculcated the habit of window shopping the deals amongst a huge chunk of Indian e-commerce users. To move beyond its niche, deal curators need to be on the same page as the consumers – LITERALLY.

Social media and mobile phones are the new consumers’ pages (devices) to reach out to their brands, check out reviews, express their views and make purchases. While the former’s importance is known largely, mobile has now become important as print coupons are now ancient and instant gratification is in.

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