Group-buying deals drive online traffic offline
E-commerce sites are increasingly tying up with local vendors to offer attractive deals to meet the growing consumer interest in e-shopping
According to an Internet and Mobile Association of India (IAMAI) report, Indian products in e-commerce space are growing at 70 per cent annually and are set to be a $10 billion business by the end of 2011. “The e-commerce market in India is largely dominated by the online travel industry with 80 per cent market share, while e-tailing comes second with 6.48 per cent market share,” reports IAMAI.
That’s an encouraging statistic for new entrants like Rediff and eBay. Rediff.com has launched a group buying site called Deal Ho Jaye where it has partnered with over 700 merchants. The site offers a discount of 30 to 60 per cent at 40 market locations in India.
Ajit Balakrishnan, chairman and CEO of Rediff.com, says the localised online deals business is expected to grow since it provides local merchants a cheaper way to reach targeted customers. “I believe that the daily deal space will become a major driver of the local online ad growth — the merchants we profile on our site pay us nothing for the listing and we in turn generate footfalls for them.” Rediff and the merchant share a percentage of the deal sold to customer. However, Balakrishnan stopped short of divulging further details.
Typically, online deal site keeps aside 15-35 per cent of the deal value. “Since, online daily deal sites provide attractive offers from local merchants and, in turn, benefit by gaining new customers, it’s a win-win for customers as well as deal providers,” says Kunal Bahl, founder and CEO, Snapdeal.com.
Snapdeal sold 30,000 deals in a single day recently. “We offered customers 50 per cent discount on prepaid recharge from leading telecom operators. In fact, at one point in time during the day, Snapdeal was selling 100 deals in one minute,” claims Bahl, who has seen the registered user base on his site cross the four million mark since its launch last year.
At least seven group buying websites have been vying for the attention of an estimated 100 million users (of whom 40 million use the internet via mobile phones), as per the India Online Landscape Report. While e-commerce websites like Infibeam and eBay India have joined the daily deals bandwagon, there are dedicated players – like Snapdeal, Taggle, MyDala, DealsAndYou and SoSasta (recently acquired by Groupon) – in the fray.
Ashish Shah, head (social shopping), eBay India, says: “Our group deals’ service currently caters to Mumbai and Delhi, but we are extending it to six key cities soon.” Shah says eBay’s network of merchants and local businesses are unparalleled. “Even with just Delhi and Mumbai deals at present, we are featuring 50-65 merchants every month. Already, we are beginning to see a big chunk of inbound requests from merchants to feature their services online against our sales team reaching out to merchants.”
eBay, which has over 13,000 vendors from metros and tier-II towns, believes that its group buying site has an edge over others because it can offer relevant local deals at affordable prices to the three million customers who visit the e-commerce site daily.
Taking the group buying experience to mobile devices, Bahl of Snapdeal claims: “Already 10 per cent of our sales comes from our mobile site.” Balakrishnan of Rediff agrees: “The explosive growth in sales and use of smartphones on 3G networks means that the process of purchasing and receiving vouchers via these devices will improve by either through development of apps or dedicated mobile sites for quick shopping.”