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Groupon India CEO Ankur Warikoo with his team at the company’s headquarters. Photo: Priyanka Parashar/Mint (Priyanka Parashar/Mint)
Groupon India CEO Ankur Warikoo with his team at the company’s headquarters. Photo: Priyanka Parashar/Mint
(Priyanka Parashar/Mint)

Online deal sites seek a new deal

A look at some of big deal websites that survived the churn, and some of the new entrants in the field

New Delhi: Two years ago, deals websites such as Snapdeal and Groupon were growing fast, and a new site seemed to launch in the category every week. The excitement hid the fact that many of these websites couldn’t grow, and went bust before they even got started, even during the height of the boom. Even the successful players quickly hit a wall, and have had to rethink their business.

Today, deals are picking up again, but the focus lies on mobile, and on terms like gamification and engagement, instead of discounts. We spoke to some of the big companies that lasted through the churn, to understand how their business works, and also to some of the new entrants into the field, to see how the industry is going to shape up.

THE OLD GUARD

Groupon

Groupon India CEO Ankur Warikoo, whose company sosasta.com was acquired by Groupon in 2011, said that the rise and fall of other companies has been part of the “settling-in period".

“Most of the people tried to use different models, and more customer-centric approaches," he said. “We stuck to our internationally tested methods. Our model places the merchant first." And while there are differences between India and the US as markets— Warikoo revealed that the ratio of male to female users here (70% to 30%) is the opposite of that in the US—the fundamentals of the business are unchanged. Despite being in the market for a long time now, Groupon India has only just launched an iPhone application, and an Android application is still in the works. Warikoo also said there was no plan currently to support features such as operator billing, which could go a long way in making the service accessible to a large number of mobile users.

We think: Groupon’s iPhone app is easy to use and does away with the need for printouts, and shows deals based on your location. Why this hasn’t been rolled out for Android, when Groupon already has an international app, is baffling, particularly considering that Android users far outnumber iPhone users in India.

MyDala

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MyDala CEO Anisha Singh. Photo: Priyanka Parashar/Mint

Earlier this year, the company launched its mobile application—a process CEO Anisha Singh said had been under way for “around one year. We built a user friendly ecosystem to help users because we recognized that mobile is going to be key to future growth."

Mydala’s early growth was driven by the daily deals segment, but Singh said her team realized early on the need for the localization of offers. “We built up a huge amount of analytics, to match the right user with the right deal." At the same time, the company has now partnered with Vodafone to work on the USSD system— a free messaging based platform. This will allow people who aren’t using a smartphone to access deals as well. (USSD or unstructured supplementary service data is used to connect mobiles to the phone company’s servers.)

The focus on mobile has driven the company for over a year now, and the app uses customer location, integrates with social sharing features well, and even suggests deals based on your mood.

We think: The established users of Mydala help provide the mobile app with a lot of momentum, while integrating with operators gives Mydala access to a broad range of users. The company has evolved at a time when others in the business disappeared overnight, and a mobile-centric platform is a natural step.

Snapdeal

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Sandeep Komaravelly, Snapdeal’s vice-president for marketing.

Possibly the best known name in the deals space, Snapdeal was able to build up a large user base in India quickly, and then was left with nowhere to go. Growing customer demand would lead to the pivot away from this business, and into e-commerce.

“In February 2010, we were focused on local merchant services. One year later, we started showcasing products because brands and buyers were both asking for it. We would eventually grow to the marketplace model because it’s what the customer wants," said Sandeep Komaravelly, vice-president, marketing.

“It’s the same customer— you want a deal sometimes, but more often, you’re looking for a specific product, and we wanted to cater to all our customers," he said.

The numbers seem to support the decision—Snapdeal continues to offer deals and discounts, but they make up only a small part of the company’s business. “We’re expecting 400% growth, and 90-95% of our revenue comes from products today," Komaravelly said. The early numbers afforded by the presence of deals gave Snapdeal a large base, but to grow further, the company needed to increase its offerings. That’s something the company is looking at again, Komaravelly said.

“The number of mobile only Internet users is going to overtake the desktop, and that’s why mobile is very important, and a great platform. We’re seeing around 15% of people come from mobile already, and it’s definitely a growth driver. We’re giving this area a lot of focus."

We think: SnapDeal’s adoption of the marketplace model has clearly helped the company at a time when the deal’s businesses were facing difficulties. So, while the mobile app does include deals, it’s almost an afterthought, which is a missed opportunity.

THE NEWCOMERS

Hoppr

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Mohammed Imthiaz, Hoppr’s CEO. Photo: Pradeep Gaur/Mint

“We’re not a deals company," is one of the first things that Mohammed Imthiaz, the founder of Hoppr, said on meeting us. Imthiaz, who has a background in mobile value added services with Airtel, started Hoppr less than a year ago.

The basic concept of Hoppr is a mix of Foursquare and Groupon, with gamified check-ins and deals standing side by side. Hoppr started with only a USSD service—anyone with a phone connection can use the app to check into a location, by dialing a special code.

“Mobile is clearly the future, but right now, the power of USSD is that it is ubiquitous. Anyone can use it," he said. “We tied up with all the major telcos, and are completely device agnostic. Anyone can dial a number, right? After that, we added an SMS-based service, and now we’ve built smartphone apps as well. The idea was to reach the widest audience first."

The strategy seems to have paid off for Hoppr. With Bharti Airtel, Aircel, Idea, Reliance, Tata Docomo and Vodafone all on board, the company has seen over 4 million registrations, and claims over a million monthly active users. “I’m not looking for a user, but a loyal customer. You offer 90% off and you get no stickiness, that’s hurting the growth. That’s why we’re focused on the second check-in."

That’s where the deals come in—Imthiaz admits that in India gamification of check-ins only goes so far. “In India, you have to give people a reason to check in."

We think: The service is easy to use, and fast. It works on any phone, and instead of just showing you deals, it shows you points of interest, sales etc, and doesn’t require you to sign in, buy a token or spend anything up front. It’s accessible, and while it doesn’t have the slickest interface, the fast growth shows that people are able to understand what is on offer.

DealChaat

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Atul Chawla, CEO, DealChaat. Photo: Priyanka Parashar/Mint

In essence, the DealChaat app doesn’t offer too much to differentiate itself from a site like Groupon. As a mobile-first start-up though, DealChaat is able to focus on streamlining the experience for smartphones. Available on both iOS and Android devices, the appeal of DealChaat lies in its simplicity. You don’t need to sign up—just download the app and you’re good to go.

Atul Chawla, CEO DealChaat, says, “The deals business model that required people to buy a deal in advance isn’t useful. If you’re planning to shop for something, you research it from home. But with DealChaat, you go out, you have some time on your hands, so you load the app and see what’s around."

With more than 3,000 merchants in Delhi on the platform now, DealChaat offers users deals from Benetton, Numero Uno, Vijay Sales and the MobileStore among others.

To offer a deal on the app, a merchant logs in and chooses from the listings packages on offer. “There is a location tool, and the merchant uses that to mark the shop on our map. After that, he uploads the terms of the deal as well," Chawla said. While the DealChaat team reaches out to merchants and offers to help them set up the best deals, the sellers are in complete control of the process for a charge of approximately 8 per listing, per day, per location.

We think: DealChaat simplifies the process of getting a deal (or offering one, for merchants). The app has some rough edges, but it’s still very new and is growing and evolving, adding more merchants and more users.

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