After a successful Nasdaq listing, raising $700 million, online discount e-commerce site Groupon is set to mark its presence in India.
After initial hiccups — founders Ananya and Udyan Bubna quit the company and Groupon India was rebranded as Crazeal — India head, Ankur Warikoo, now plans to take on rival fast-growing discount sites and penetrate smaller cities.
Warikoo is busy focusing on the company's expansion plans. Next year, Crazeal would increase its presence from the current 11 cities to 18, primarily targeting Tier-II cities. Warikoo is also planning a few changes, as the company ventures into smaller towns. The company has also stepped up its advertisement and marketing campaign.
“Two important changes we are planning to introduce as we enter smaller cities are cash-on-delivery (COD) and a shift in the deals we provide. Clearly, these cities would not have a large number of restaurants or hotels. So, we would focus more on national products and the travel category,” said Warikoo.
Another area the team in India is working on is collaborating with its units in other markets. Groupon Europe has successfully tapped the India team to secure deals for its users in Europe. It has also tapped users in markets like the UAE and Southeast Asia for international deals.
“We sold Kerala deals in Europe. Jaipur's Tree of Life — resorts and spas — were also well accepted by users in the UAE and Singapore. This would be an area in which we plan to expand. We have seen good response for international deals from India. We have also introduced five destinations like Turkey, Southeast Asia and Singapore,” said Warikoo.
But what about competition? According to Vizisense data, Crazeal does not figure in the top five business-to-consumer e-commerce companies in India. Since the company was a late entrant in the market, others were able to garner huge market shares. The largest player in the segment, Snapdeal, accounts for over 600,000 subscribers to its deal every day (February data). Fashion and You, which recently raised $40 million through a venture capital fund, has close to 2.7 million registered users, while Deals and You accounts for around 1.5-two million users.
Warikoo agrees the competition in India is intense. And, the fact that India is among the few countries in which Groupon is not a leading player only adds to the pressure. “But the good news is the way we do business is different. First, we are a full-price deal site. This means if a product is sold at a discount price of Rs 2,000, the entire amount would be paid to us, unlike other companies which allow users to pay a minimum upfront payment,” said Warikoo.
According to him, this results in two benefits. First, the likelihood of a customer visiting the merchant outlet is more compared to someone who has paid just Rs 99. Second, there is a significant difference in the demographic profiles. “We have found a demographic difference in user profiles — from people paying Rs 1,000 - Rs 99 or to a person who would pay Rs 100 through COD. If a shopper cannot even pay Rs 100 online, the question to be asked is whether we want that customer as of now,” Warikoo added.
This has helped the website gain access to high-quality merchant chains and high-end restaurants. “We did so well with some of these that now, we have decided to feature them internationally,” Warikoo said. Premium brands that the site offers deals from include Neemrana, Crowne Plaza, Hilton, Javed Habib and Shahnaz Hussein.
For Warikoo, increasing the association with high-quality brands would be an area of focus. “The most important entity in the value chain is the merchant. If you can service the merchant well, you would manage to secure better merchants, and only then would you get customers. No one is interested in the number of deals you can give them, anyone can do that on Wednesday,” he says.
However, the problem with this is maintaining the relation with the merchant. While Warikoo claims the company was the first to start innovative or premium deals, other discount sites have also been able to catch-up. “It's difficult to maintain the exclusivity aspect,” he says.
While Warikoo did not disclose the number of users in India, Groupon accounts for around 145 million subscribers globally. The company Groupon had entered India by acquiring discount portal Sosasta.com earlier this year.
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