Ideas|Products|Startups|VCs

I met Jackson Fernandez one of the founders of Grabbon last weekend, the first startup to introduce group discount model in India. In a candid interview he answers my volley of Questions, here you go:

Q. Why did you pick group discount model, is it just driven by Groupon success and valuation. Why do you think Groupon model will work in India.

About a year back one of us wanted to buy a new phone, we did our research and found that the best rates were available at the large retail chains. Obviously it was a volume game, since the large retailer could promise volumes they could warrant the best rates. This was the genesis of the idea. If a group of people could get together for bulk purchase then they could get the best discounts. Soon we realized that the discounts possible in services could be larger compared to products. While we were trying to shape up an offering on the collective buying concept, we chanced upon the Groupon model.

In the Indian context, we think the need for discount is ingrained in the consumer mentality, but having said that the couponing business in India is far from mature. The key will be to figure out what works best in the Indian milieu.

Q. Grabbon is the first grouping portal in india and many sites emerged within few weeks of your launch, how you are maintaining edge over your competitors, any differentiating factor exists now.

Yes you are right; there have been many sites that have emerged in this space within a short duration. For an observer it might seem that the barriers to entry into this space would be fairly low, but frankly that’s not the case. There is immense amount of work that goes behind ensuring that the engine keeps chugging.

Many of the new entrants are jumping into the bandwagon hoping to make quick bucks by rapidly expanding to other cities and blatantly replicating the deals (and in some case the creative content too) of the incumbents. I think need of the hour is to innovate and find the right mix that works in the Indian context.

Grabbon was the first to test out the token amount and multiple deal concepts and it has quickly been adopted by the rest of the pack.

Q. How did you manage to convince merchants to display deals in Grabbon since group discount was relatively new concept, what are the challenges you faced.

We do face resistance from some quarters of the vendor base, but to a large extent they are receptive to new ideas, especially when it is relatively risk free.

Q. How big is the market size, have you done any market research. How you going to increase the market size. Any plans of reaching out to offline customers since you are just targeting online customer.

We don’t want to quote a figure to the market size is this relatively nascent and high potential category, wouldn’t want to be held against that figure J (remember Thomas Watson’s famous prediction that there is a world market for maybe 5 computers). In a way the entry of multiple players could be a blessing in disguise as this could accelerate the rate at which the market size grows.

Our immediate focus is to reach out to the online mass that we haven’t connected yet.

Q. How Grabbon makes money, is it only when deal is ON and transaction is done. What are your future monetizing plans.

We make money for every campaign that we successfully run through our site. Can’t reveal it here now, we have some exciting plans and surely will keep you updated.

Q. What are the steps you have taken for fraud detection and prevention.

A robust website and a reliable payment gateway take care of most of the issues; we also have a mechanism between the vendor and us to ratify every voucher sold.

Q. Restaurants/lounge/Weekend packages, what next in the product offering, any plans to get into the electronics/housing segment.

Well not immediately, the approach for products has to be well thought of as the liberty to play around with margins is limited.

Q.  Who are the founders of Grabbon, briefly state their individual role.

The people behind Grabbon are Tony, Bala, Sandeep and I. Bala and his team handle the IT bit and everything related to technology, Tony pretty much handles the vendor on boarding, Sandeep is responsible for Marketing function, while I handle business development and other special initiatives. Tony, Sandy and I were classmates during our MBA days at XLRI Jamshedpur. We were working with leading management consulting firms before we decided to quit and take the plunge.

Q. Are you looking out to venture capital to carry out your expansion plan.

We believe that funds at the right time are a critical component of any successful venture, so yes we are looking to raise funds in the near term. We have more than a couple of options worked out, so depending on how the landscape shapes up the direction and size would vary.

Q. Any advise you would like to share with wannabe entrepreneurs.

Frankly we are still in the early learning stages so the only advice we could give is just follow your heart and enjoy what you do. You will never know what you have unless you test it out.

-Hitesh, vcBytes.com