Potential Indian buy for Groupon
Immense mind boggling activity in the social buying segment taking place in India. Groupon, the American giant is valued close to a billion dollars. A couple of smaller Indian players have sold out. A few have grown bigger and better. Their margins have grown stronger, touching the 30′s, than what I earlier predicted. Funding has come to a few and others are on the negotiating table. This sector is up for a lot of action in the next 6 months.
It all started in Oct – Nov 2009 when enthusiastic copy cats holed in dimly lit rooms in Bangalore and New Delhi were burning mid night oil to find a suitable name for the Indianized version of the portal in a hush hush manner. Some are as funny as Mydala, (who came up with that) the others found it convenient to even phonetically copy the name; Grabbon (restricted to Bangalore, sold out to Snapdeal), let alone the site design. Koovs.com (I don’t even know what it means), started out in Bangalore and now in Delhi, Kolkata, tried to be different but not by much, copied the background image, changed the color and the layout. Snap though came up with an up market name forgot that the word is usually associated with breaking rather than “executed quickly”.
The race today is to have presence in maximum cities before a global player sets its eye on India. The strategy then could most certainly be of a sell out and hence we see an increased flow of money in this segment. So when Koovs.com partners with Myntra.com and sells FIFA jerseys in cities, in and beyond its operating boundaries, Snapdeal gets “inspired” and displays 14 more cities only to sell customizable mugs. Mydala on the other hand slipped into selling products by displaying a deal to sell Olive Oil.
According to the industry insiders, there is an ongoing hectic consolidation amongst the players, again to appear bigger and improve upon the quality of deals which went missing with size. Koovs it seems has been the only player, refusing to sell off and firmly on its “national” quest. With money flowing in, Koovs will be interesting to watch. Unconfirmed news suggests some big tieups on the cards for this player which has improved its quality and range of deals.
Dala starting out of Delhi with deep pockets struggles to sell and is not doing well out of Delhi. Snap prefers tie-ups with merchants having national presence and hasn’t focused on local execution much. Result, quality of deals has suffered and hence the acquisition of Grabbon. This site doesn’t even display the number of coupons sold, so you can’t know their selling potential but if the quality of discounts is anything to go buy, they could not be doing very well. Koovs from Bangalore is a self funded venture started by few IITians shows some promise for quality of deals although they are restricted by their lack of financial muscle and merchant contract implementation. Recently starting out in Delhi, they can only find it tough as the city space is already crowded. Kolkata, abandoned by all the other players, could be a smart move, time will tell. Grabbon, another Bangalore based venture started out decent, has now been acquired by Snapdeal.
Taggle, the latest entrant with funding; will have an uphill task to justify their execution model and to go by the quality of deals featured and numbers sold. Taggle is not for the masses its for the classes and average deal price is Rs. 750. Panic will set in, if revenues don’t justify the investments, soon.
I think either Koovs or Snapdeal are most likely to surge ahead as the leader. Since Koovs is the only Indian player to have International presence in Singapore and if rumors hold any water, there are two more countries ready for launch. Koovs will need a shot of green backs to be able any significant impact at a national scale or will share the fate of wanamo or grabbon. Koovs, already the biggest site in Bangalore in terms of numbers of transactions on the site, will be a force to reckon, if their initial success in Bangalore is anything to go by. Bangalore is significant by the presence of all major players and is interesting to watch since the winner here sure must have the team and the conviction to take on the country and replicate their operational supremacy. Snap, sure has financial muscle but is behind Mydala in terms of number of quality of deals. But the ground level execution of Mydala’s deals has been shaky.
I wouldn’t stick my head out any further by guessing how this battle of startups enfolds but sure do know, that the eventual daddy of the Indian market will be bought out by the mother of it all, Groupon. What else do you think a company worth $ 1.2 billion would do if not buy out its best imitator in the soon to be the hottest ecommerce market; India.
