E-commerce sites battle it out with group-buying sites

One may argue that group-buying sites are here to stay, with the established global players like eBay India and Groupon making a bid for the same.

Early this year, eBay India, the market leader in Indian e-commerce space with a 45 per cent share, launched a social-shopping feature. With three million visitors each month, the site did not even worry about driving traffic. “We entered the group-buying space late. But then, we just had to move traffic from our site to the social-shopping page. It was also easier for us to get merchants because of our presence in the e-commerce space,” says Ashish Shah, head, social commerce, eBay India.

But e-commerce sites like 99labels.com, Fashionandyou.com and Celebwear.com that sell apparel and lifestyle products to an exclusive group of members claim an upper- hand over group-buying portals. “With private sales club, there are less chances that the there will be two identical products in the same circle. And when we give an Armani or a Nita Lulla outfit for half the price, it is a steal,” points out Rahul Narvekar, co-founder (Director Brand sourcing), Fashionandyou.com.

Then there are group-buying sites like Groupon betting on its brand name . The Chicago-based pioneer of the group-buying concept, recently acquired 100 per cent stake in Sosasta, which entered the market in October 2010 with an initial investment of Rs 3-5 lakh and broke even within the initial months. They have now decided to use the Groupon money to procure real estate and expand to 25 more cities in the next two months. “India has a lot of potential for the e-commerce market to grow. We wanted to use this to our advantage,” says Ananya Bubna, MD of Groupon India.

With group-buying reaching new highs, there are now sites that offer deals on travel (Vamoose.com), property (Groffr.com) or electronic items (Koovs.com). Manoj Gursahani, CEO of Vamoose believes in giving more than just a bargain deal. “With Vamoose, we chose to do away with the middlemen and have Vamoose certified hotels to guarantee good service. Our USP is that we are able to go beyond the deal and give information also about the places to visit.”

With new players joining every month, e-commerce sites like Fashionandyou and Brandmile are fine-tuning their platform to get better deals and reach untapped pockets. North East, according to Fashionandyou’s Narvekar, has proved to be a good bet because of fashion awareness and available money.

Group-buying sites can, however, argue that they offer better bargains as they guarantee the retailer a minimum number of customers, which e-commerce sites cannot. “Ours is not a couponing model and, therefore, we cannot give discounts like group-buying sites,” says Narvekar of Fashionandyou.

Even though niche players can boast in-depth knowledge of their segment, they cannot deny that lesser traffic means more time to break even. “We know that when a customer buys a deal from us, he may not buy again for the next 10 years. It is usually a planned purchase,” observes Vikhyat Srivastava, co-founder, Groffr.com.