E-commerce: Group Buying for Massive Discounts

The game was comparatively easier for the group buying businesses in India, as the model has been successfully tried and tested abroad. Indian buyers love discounts, that is probably why the market has been able to attract investments from private equity players, and with money flowing in, its certainly set for growth. Snapdeal, Grabbon, Koovs, Mobstreet, Wanamo, Group2Deal and Deal and You, are some of the forward-marching players in this track, even as new players are capitalizing on the opportunity.

Another Indian group buying site, SoSasta.com, now to be re-branded as Groupon India, was acquired by popular international group buying portal Groupon in January this year, surely giving it an edge in the Indian e-commerce market. While it may be too early to paint a true and clear picture, the trend so far has been more than encouraging.

Conversely, group buying sites being in the service space need to get much localized to cater to a large audience, and thats where the challenge lies. For example, in a city as huge as Delhi, if you stay in Janakpuri, you would not care for a great deal in Mehrauli as it would easily waste 2 hours in travel time. Even though the model is exciting, there are a lot of players emerging; and how many ride the wave would depend on how deep one has been able to penetrate and go local.

This is how the business worksthe group buying sites join hands with merchants to offer consumers incredible savings on products and services. The merchant agrees to offer customers a specific product or service at a greatly discounted rate (usually 50% off or more) if the group buying company can generate more than the specified minimum number of sales chosen by the merchant.

Once the minimum number of sales is reached, the deal becomes activated and all the customers that signed up for the deal become eligible. Eligible customers credit/debit/cash cards are charged for the purchase and they receive an email/sms of a voucher that they use to redeem the deal with the merchant. People all over the world love deals. India is no different and Taggle is working hard to make what was once considered decisions by customers into impulse decisions, says John Kuruvilla, CEO and founder, Taggle.

On the other hand, Group Buying model creates ability for small vendors to reach out to millions of consumers with no upfront costs, and for consumers to benefit from the promotions from these vendors resulting in great savings, says Gaurav Kachru, CEO, Deals and You. While these huge discounts might sound costly to business owners, it puts their business in front of hundreds of thousands of new customers that can sample their products and services. Merchants are essentially getting free advertising in hopes of converting one-time deal buyers into long term customersa win-win for customers and businesses than community or group buying; at least for now.