Over last 2 years one has seen lot of Deal sites come up and be at forefront of the new E-Commerce revolution, to name a few snapdeal.com, dealsandyou.com,sosasta.com(Groupon India venture),mydala, taggle, koovs, bindaasbargain, dealivore among many others.
Many have raised the question on the business model of the deal sites questioning the need for a crowd sourcing/group buying models ability to gather scale in Indian market scenario. From Indian E-commerce successful measurement metrics of doing 1000 transaction/day being a yardstick for a model to survive one sees atleast top 3-4 players already achieving the scale and going strong, though in how much time will they achieve 10,000 transactions per day to become a success is to be seen. These models requires going hyper-local which means if you are in Delhi, you just dont need deals from South Delhi but actually go upto the level of providing deals in New Friends Colony. While having set that this space will have 2 different models of operations which will emerge out keeping in mind India scenario very similar to OTA space where we will have deal sites similar to Makemytrip.com model (One of my fav Indian E-commerce company) of the world focusing on end to end customer acquisition,servicing and value realization and other will be like Via focusing on being a platform b2b play, both the business models have their own merits and demerits with MMT model shown its worth will wait for Via model to prove its exit value.
While deal sites focus on going hyper local and expanding market beyond the traditional digital advertisers enabling SME’s to use power of Internet to scale customers we have seen lot of new E-commerce players coming in and building businesses using marketing reach of Deal sites. Which brings us to the next part of the story on how Deal sites are going importance in the overall digital value chain by owning 3 important pieces required to build relevant e-commerce model in india
– E-commerce ready Audience
– Customer service
1 out of 5 deals on deal sites being pushed are voucher codes for other e-commerce companies ranging from Letsbuy, HP snpafish to lensmart.com like niche players which shows how Deal sites are becoming an important quadrant in digital media planning and focus need to think e-commerce acquisition strategies around it. Which proves that deal sites model shouldnt be considered a pure-play e-commerce but one with high media valuation.
In US and UK Voucher code strategies have been core for growth of e-commerce with large media houses running coupon code sites and meta search engines. One believes deal sites can play an important role by becoming a voucher code platform in parallel to deal a day concept which will help them in following ways
i) Generate content which will help improve SEO traffic
ii) Impact Organic traffic with people not satisfied with deal pipeline today still remain regular visitor and this acts like a strong retention strategy.
iii) Deploy parallel media revenue which goes straight to bottom-line and helps improve revenue in capital intensive business.
The deal sites will become central to e-commerce ecosystem as ebay was 3 years ago from where most of the current wave of e-commerce companies validated their business models by setting up ebay stores. Deal sites are here to stay and there is enough room in market for multiple players.