How deal sites like Groupon, MyDala have adapted to thrive in India

When onion prices soared up to Rs 100 a kilogram last year, Groupon, a group deal website, offered to give them away at Rs 9 a kilogram. This month, keeping its momentum going for never-heard-of-deals, Groupon offered a discount of Rs 100 on train tickets.

"We always strive to get the best deals out for people, possibly unheard of deals and we will continue doing that," said Ankur Waariko, CEO, Groupon India, adding, "Yeh toh hamaare khoon mein hai (It's in our blood)."

For the US-based group deals website, which has its operation in 48 countries, the Indian business is the most fruitful, growing at 100 percent year-on-year, according to Waariko.

"When we started this venture in 2011, almost every website was thinking of the deals business. However, I will go as far as to say that they were not even in the deals business," he said. While deal sites like Dealsmagic.com, MasthiDeals.com and Taggle.com shut shop, Snapdeal, MyDala and Groffr, decided to change their business model.

According to Waariko, the common assumption among people is that group deal business is a for-customer business. "It should always be a merchant's first business, where we solve the problem of the merchant and not the end-user. The merchant's problems range from sales, capacity planning, product/outlet launch, etc. And we, sort of, try to solve these problems by offering exciting deals," he said.

Bounce back

MyDala, which started in 2010, had a good start initially, but found itself stuck in a bog when other deal sites sprouted at a rate the company could not cope. Consequently, it found itself getting irrelevant to customers.

"Customers forgot us quickly after they found more options at other websites, and we became just another name," admitted Anisha Singh, Founder, MyDala.

After struggling for two years and competing with other deal sites that were also attracting investors, MyDala bet big on mobile to acquire customers in 2012.

"To be relevant amid the horde of other deal companies, we realised we need to make the deals real time and personalised," Singh said.

In 2012, MyDala partnered with Vodafone to offer exclusive deals for their subscribers and soon more telecom companies partnered with the company. By partnering with telecom companies, MyDala was able to offer its customers the option of paying directly from their mobile account without using their debit or credit card.

"A customer can choose from various categories of deals by paying a minimal one-time charge, alternatively the customer can subscribe to receive coupons at a monthly rental of Rs 49," said Vivek Mathur, Chief Commercial Officer, Vodafone India.

Last year, the company turned profitable and currently sells 150,000 vouchers a day, of which a majority are sold through the mobile platform. By roping in the telecom companies, Singh said, she could offer personalised deals to the customers based on their balance on the phone, age bracket, location, etc.

"Telecom companies like it because they are getting to know the users better by understanding their buying pattern. For users, it's so much better as earlier they could only download ringtones and caller tunes from their phone," Singh said.

Money deal

MyDala had raised Rs 27 crore from Info-Edge in two rounds of funding in 2011; prior to that it had raised Rs 1 crore from PE investors Ajay Relan and Jayanta Basu. In May 2012, Times Internet acquired CouponDunia, a Mumbai-based coupon company. Earlier, it offered coupons of only online retailers, but post the acquisition it inherited offline merchants, courtesy TimesDeal. Times Internet is the parent company of TimesDeal.

"Timesdeal has been doing good in the offline deals market from restaurants, bars, etc. The acquisition is helping our brand to combine the two types of business. We want to be in as many transactions as possible. More transactions happen offline than online," said Sameer Parwani, Founder, CouponDunia.

The company says it gets 3 million visits a month and has 1,600 online merchants, as well as 700 offline merchants on board.

Groupon is present in 12 cities. MyDala with its hyper-local approach is present in 152 cities, which, according to Singh, was possible because of their strong presence on mobile.

"By selling local coupons through mobile we have been able to reach the smallest of Indian cities and towns. Now the deals are even relevant for someone living in Siliguri," she said.

Waariko says the reason they have not expanded rapidly is because they vet each merchant before taking them on board.

"All other deal sites created a newspaper of deals, we are not that sort. Despite there being a huge demand for our services in tier-2 and -3 cities, we are present in only 12 and not 50 cities due to the lack of quality merchants that Groupon can associate with," he said.

However, telecom companies are seeing rapid demand in smaller cities. Mathur from Vodafone India said, "We are seeing a big uptake in the tier-2 and -3 cities and in rural India. This is in line with our strategy to take the benefits of the internet to the masses."

Globally, Waariko said, 54 percent of transactions were completed on a mobile device in March 2014.

"In India, 20 percent of our revenue is generated through mobile. We are also looking at enhancing our mobile services with features such as location-based services, real-time alerts, and customized deal alerts as per a consumer's shopping history," he said.

Updated Date: Jul 25, 2014 16:06:42 IST