Group Buying in India: Attack of the Clones
Happy, Merry and Cheerful on success of Groupon. Social shopping was the way forward, most of them spoke of this since mid-2007; however the way Groupon solved the puzzle, no doubt earns them a success.
Came across Andrew Mason’s take on Groupon Clones on TechCrunch and through links stumbled upon Sanjay Mehta’s review on one of the India offerings – Wanamo that incidentally was also one of Groupon clones. An interesting discussion between Sanjay and Wanamo’s founder follows the review.
So back to my crunching game – how large can Social Commerce or Group Buying become in India. What potential lies in it?
Market Stage: Chicken or Egg? Still nascent stage, but already crowded – too many chickens and too any eggs.
First Thoughts: Star Wars – II. Attack of the Clones (or Cousins). Incidently one look at all of them, and you see all design elements, features and placements are similar with each other and with Groupon. A few of them actually ripoffs.
What would differentiate: Quality of deals, execution of ideas & ability to innovate this space.
Group Buying: What is the market size in India??
Known group buying websites in India: 7, Estimated: 10
Average Transaction Size offered: Rs. 500 (80% of them are under Rs.400)
Average Successful Coupons sold: 50 (as claimed)
Current Cities Catered: 4 (Top Metros only)
Total Market Size: 10,00,000 INR per day = 1 Million INR per day
Thats a kewl: 365 Million INR per year or 7.3 Million USD per year
These numbers are assuming that all ten Group Buying services see 50 Transations per day in all 4 Metros. This is were the analysis starts…
Will this model be successful in India… NO (Not till the point attack of clones continue)
Why Groupon succeeds and has potential to grow:
- Original concept & product. First mover advantage.. and its huge!
- Groupon has plans to move to 100+ cities across world
- Groupon sells about 200 to 2000 coupons per day from $10 to $125 in each city
- They are already in 45+ cities as of today
What Group Buying services in India need to re-think upon & probably revise their business strategy:
- It worked in US, it will work in India too approach
- The front end UI has been adapted/copied. Hopefully some player has built a robust backend too.
- India does not have 100 (or even 20+) highly penetrated ‘Internet’ cities. It would pinch beyond the IPL cities (Cities with representations in Indian Premiere League – IPL Cricket) on both sides.. Consumers & Partners.
- Most rely on Social Media for marketing & buzz. Good.. but Social Media is notoriously known for buzz and communication, and not conversions. However for Group Buying deals – this might just work if the deal fits right.
- Most deals in US are for Food, Spa, Coffeshops. Unlike US, in India we have choices not just in restaurants but also cuisines… Punjabi, Mughlai, Goan, Chinese, Indian Chinese, South Indian, Goan, and so on. Deals, typically on food & restaurants need to be much wider to appeal to wider audience.
- India.. We still don’t know how many users we have (Claimed 50 Million Internet Users)
- Others concerns – Internet Transactions, Security, Credit Card Penetration. But for the kind of audience they choose.. this might not be significant issue. But would be when they expand to more cities.
- Indians by culture and by nature love to bargain by themselves! And take pleasure in doing that
- We love to choose – don’t we? One deal per day might not fit our appetite.
- Cricket & Bollywood; Cricket & Bollywood; Cricket & Bollywood
- You are not alone to solve these problem.. at this early stage itself you have huge competition!
So now that you have started, get started on the execution. Few cues to work for this model in India are:
Multiple Deals in a City, Payment Options, Alternate Revenue Channels like Advertorials & Advertising, Go beyond Internet… (Mobile) and much more.
Innovation and adapting to Indian market will hold the key for Group Buying services. And they need to execute that fast, as many deep pocketed services that are remotely and closely associated to related domain (like city event trackers, and hotel review sites… & you know who else?) will find it much easier to replicate this business model overnight.
A clone will be clone… so Innovate & Differentiate