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Groupon's India watch: Who's the gainer?
By Eureka Bharali, SiliconIndia
Bangalore: It googled up Google's offer and wishes to make it big on its own. Groupon, the U.S. based online deal site, which today stands at par with Facebook and Zynga among the top internet startups is mulling all options to expand all over the world. The company President Rob Solomon's words "Our plans are only to grow rather than get sold off," seems to be right on track. Currently for them 'It's Asia calling!'
Right after the Google bash, the company acquired deal sites Beeconomic in Singapore and uBuyibuy in Hong Kong, while in Taiwan, it acquired Atlastpost, a location-based social networking site that has about 1.2 million users. And the next on radar was India. The company has recently made a purchase towards the Eastern part of the country in Kolkata. Its strategic acquisition of ex-Google employee founded sosasta.com, an Indian deal site throws a light on the growing importance of India. According to a report of Jasper Infotech, Group Buying has given a different dimension to the e-commerce industry in India. The industry has experienced a massive growth from selling around 100 vouchers a day in the beginning to selling more than a few thousand vouchers on an average currently. This growth is likely to grow at a faster rate in the coming months, if current trends are any indication. The Indian retail services market is valued at $100 billion and the goal of the group buying industry is to migrate some of these spends from offline to online. If we assume even one percent of these spends migrate, we are looking at a $1-billion market in the next decade.
Competition ofcourse increases with this popular name sneaking into the various deal sites' territory, at the same time it may stir the faith in the business model of the startups. The real impact would be on those companies who are mulling on venture funding, as the group buying of various services will not be considered that profitable. As Ranjith Boyanapalli of BuyThePrice.com points out, "After a considerable point the market starts to consolidate and 80 percent of the markets remains within two to three players and it's the same case for group buying too." The threat also lingers on the retail chains who wants to have a better growth chain. As consumers are always price-conscious, so it's easy for them to sort for the cheap deals than enter the retail shops for the same deals at a higher price.
But does this imply a grand start for Groupon? Need not be as Boyanapalli states, "Unlike eBay, Groupon, as a name, is a buzz only within a small community of corporate, investors and media and not among the common man who holds the significant buying power." Also, Indian consumers seem to be loyal and are not much open for much of the fritters and are more guided by the friends' and users' comments. Hence, in the short span, there wouldn't be a direct shift from the present deal sites and the Indian players still have the time to construe loyalty schemes. The future is yet to be seen.
