Deal sites make hay as e-comm rises

25 Sep,2014

 

By Payal Ganguly & Aditi Shrivastava

 

The fierce rivalry among ecommerce sites to snag new customers through massive discounts has expectedly led to burgeoning sales at couponing sites that enable users get products and services online at a steal.

 

With the rise of e-commerce, deal buying and couponing sites, such as Coupon Dunia, Groupon and several others, have seen revenue rise as much as 500%, most of it attributed to the bigger players – Flipkart, Amazon India and Snapdeal.

 

In a couponing website, a customer can search for a particular discount voucher and use that code to get a discount or cashback on an etailer’s website. “I see couponing as a less exploited marketing tool as of now. Going ahead, as ecommerce grows, we will see more and more success for these sites,” said Arvind Singhal, chairman of retail advisory firm Technopak.

 

A majority of transactions for these portals still come from the bigger ecommerce sites like Flipkart, Amazon India, Jabong, Fashionara and MakeMyTrip, among others.

 

“A lot of online shoppers start their shopping journey from these (couponing) sites, and we do get a healthy share of business from them,” said Darpan Munjal, co-founder of Fashionara.

 

The couponing sites get commissions that vary across merchants and categories. For electronics, it is 2-5%. For clothing it’s between 10% and 15% or even higher. Travel sites usually pay about Rs 100-300 per flight booking. Some ecommerce partners like RedBus pay fixed amounts per transaction regardless of cart size.

 

“At Myntra, we are working with several affiliate networks for more than two years, directly or indirectly. Affiliates drive about 10-15% of our overall transactions,” said Deepak Srikumar, head of digital marketing at Myntra.

 

“The coupons on ecommerce site are usually directed at customer acquisition and ensure that the customer revisits the site the next time to redeem the coupons,” said Rachna Nath, leader of retail and consumer at advisory firm PwC.

 

In 2012, Amazon entered in India through price-comparison and lead generation site Junglee, which it bought years earlier. Mature markets like the United States, have seen some couponing websites including Coupons.com, RetailMeNot.com, even go public in the past couple of years. Japanese ecommerce giant recently bought couponing site Ebates to enter the US market.

 

The opportunity in India is also huge. Indian ecommerce market is expected to reach Rs 50,000 crore by 2016, according to Crisil. Going ahead, these sites are betting on mobile to drive its revenue. “We expect our mobile app to be a game changer,” said 30-yearold Sameer Parwani, who started CouponDunia from Boston in the United States in 2010. The company, which has now been acquired by Times Internet, is expanding its offline restaurant coupon business and expects to earn a revenue of Rs 40 crore in fiscal 2016.

 

“With a higher discount range in all the online stores, people are completely involved in shopping online, mainly due to the cash on delivery and return policy features,” said KR Murle, founder of Getextrabux, a cashback, deal hunting and price comparison portal. The company, which was set up with an investment of about Rs 45 lakh, pays around 60-90% of the commission it earns to the customers as cashback.

 

The tech-based companies have consciously chosen to stay away from the local-deals model. “Working with local retailers could be tricky as sometimes the deals get oversubscribed and they run out of margin,” said Swati Bhargava, cofounder of Cashkaro. “For us, online was a better way since it’s a volume game we are targeting.”

 

Cashkaro said its sales have gone up 500% in one year. “While I don’t mind paying to (these couponing sites) to get new customers, if I had to pay for a repeat customer, I wouldn’t be very happy,” said Praveen Sinha, managing director of Jabong.

 

The mobile-first has worked well for Mydaala. com which is one of the few surviving deal sites for local businesses. “We were one of the first to tap into analytics which helped us user-specific deals every time they logged in but presently no one seems to be working with local merchants,” said Anisha Singh, founder and CEO of Mydaala. com, which introduced couponing for all major telcos last year.

 

However, local-deals space remains niche with few players venturing into it. “When we entered the market in 2011, there was a lot of competition in India and none of these sites curated the merchants who were a part of it. As a result, once the customer has a bad experience, he would never come back to the coupon or deal site,” said Ankur Warikoo, CEO of Groupon India.

 

He said that Groupon has evolved to accommodate a mix of transactions keeping in mind the growing ecommerce industry. While local deals contribute to 60% of Groupon’s business, 25% comes from manufacturers who list directly with the site to sell and the remaining 15% is driven by travel deals.

 

Source:The Economic Times

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