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Big group, small price

Big group, small price

Group buying is the latest online trend offering big discounts on leisure activities and at eateries, a first in the country.

You may have honed your bargaining skills at the snootiest of shops, or if you are blessed with a Netsavvy gene, you would have trawled numerous discount sites. But have you managed to extract a 90% discount at a restaurant or snagged a spa treatment at half rate? In all probability, no.

Well, now you can, thanks to a simple online concept called 'group buying'. In the past year or so, e-shopping in India has undergone a makeover with the launch of several group-buying Websites. Here's how they work: consumers find deals on such sites, sign up, wait for others to hit on these within a stipulated time and get cut-rate products and services.

One can get discounts ranging from 40-95%, with the most popular categories being restaurants, gyms and salons, besides niche options, such as dancing lessons, body art and adventure sports. On an average, at least one such city-specific deal is offered every day.

It's a win-win deal: while the customer gets a big discount, the local businesses and manufacturers get an assured number of customers and a parallel channel to advertise, while the Website typically earns a commission.

So far, none of the Indian sites, unlike their western counterparts, had offered bulk purchase concessions and discounts for leisure centres and eateries.

Now, you can have deals such as a flat 51% off at 34 Chowringhee Lane, a Delhi-based fast-food chain, by dealsandyou. com. The Website managed to sell 1,043 vouchers. Another deal by mydala.com offered a 97% discount at Body Sulpture gym in Delhi, with the site selling as many as 288 vouchers.

These portals are already high on the popularity charts and have a mass following on social networking sites such as Facebook and Twitter.

"The approximate worth of the retail services market in India is Rs 4,05,000 crore. Given this fact, once these discount sites offer online distribution to the small and medium enterprises (SMEs), the business that can be generated is tremendous," says Kunal Bahl, CEO, Jasper Infotech, which owns Snapdeal and Grabbon. This site claims to sell one deal every minute and has the widest geographic spread among its contenders.

Attracting Customers

Almost all the sites plan to expand their businesses soon. "Initially, we targeted young, urban consumers, but now we'll also aim at the tier 2 and 3 cities, where the Internet penetration is high but organised retail is not. This will allow us to offer this preferred source of purchase," says Ranjith Boyanapalli, co-founder, buytheprice. com.

As the basic idea and site layouts are roughly the same, these portals have devised unique deals and features for the sake of product differentiation. While buytheprice. com is a good place to find discounted electronic items and has a 'shopping assistant' to give you best purchase options, groffr.com is the only site to offer group deals on real estate and automobiles.

Some sites like mydala.com and dealsandyou. com have adopted a referral marketing strategy, wherein buyers earn 'e-money' to promote their deals. If you are not comfortable with e-payments, masthideal.com and dealmagic.com provide the option of cash payment and buying on phone.

A new site is being added almost every month to this flooded space. The latest entrant is buzzintown.com, owned by the USbased Wortal Inc. Recently, a group deal section was added to the twoand-a-half-year-old event and entertainment portal. On the other hand, old players like mobstreet.in have reformatted and relaunched their Website to keep up with the competition.

The group bargain rage has also spread to the small screen, with Cellcast Interactive's teleshopping show, Bargain TV, being aired on Imagine Showbiz, Turner's 24-hour Bollywood music channel.

Arjun Basu, Anisha Singh and Ashish Bhatnagar, founders, Mydala.com
"There will be a lot of churning and consolidation in the coming months, which will be good for this space. Group buying is set to grow rapidly," says Anisha Singh, cofounder, mydala.com. The competition is tough and the market can accommodate only a few big players. So it boils down to survival of the fittest.

How do you Pay?

Though there are two models of operation, the most common is the one in which a minimum number of buyers is required to get a bargain.

You book a deal by making an advance payment online. Once the number of people who reserve the same offer crosses a set figure, the deal is 'live' or gets 'tipped off'. An e-coupon reaches your inbox immediately and no charge is made to your account till this happens.

It's a win-win deal. Even as the buyer gets a discount, the manufacturer gets assured customers, and the Website, a commission.
The other format works on the principle of 'the more the number of buyers, the bigger the discounts' and buytheprice.com is the only Website following this model. The site gives an initial discount of 10-20%. The more the takers within the stipulated time, the bigger the discounts get. The trick is to wait, watch and then buy.

As far as services are concerned, a token payment is usually made online and the rest is paid to the merchant directly. As for products, full payment has to be made upfront. While nearly all major credit and debit cards are listed on these sites, most of them also accept international cards.

The idea of partial payment is more lucrative for the merchants as they get paid at the time of delivering the service and don't have to wait for a payment cycle. For buyers, the immediate etransaction amount is reduced.

Credit card payments, Internet banking and other transactions are processed through a highly secured payment gateway. The sites make use of the latest encryption technology. The card details are entered directly on the site of the bank or payment gateway. So, the discount sites never capture the credit or debit card numbers.

Some of them even assign relationship managers for transactions of high-value purchases. "Every customer of ours gets a thank-you call and another one after the delivery. So far, we haven't had a single case of online security breach or credit card fraud," claims Boyanapalli.

24 x 7 Discount Sale

Besides attractive discounts and offers, another aspect that has worked in favour of this emerging trend is the trust factor. "When you are the only person securing a deal, you may have doubts about the quality of the product or service, but if you know others are buying the same thing, you have more trust," says Singh.


"So far, we haven't had a single case of online security breach or credit card fraud."
RANJITH BOYANAPALLI
Co-Founder, Buytheprice.com
Crowd-buying sites are also leveraging on the high volumes to get deeper discounts, something other discount models may not be able to offer. This is because they provide the merchants with an assured number of customers, which helps them plan and manage their customer cycles better. "The difference is similar to that between retail and wholesale purchase," adds Singh.

Watch out for

Before you indulge in these services, remember to go through the terms and conditions. The vouchers, for instance, may not include taxes, and if so, you will have to pay these at the merchant location. Also, you could be charged a transaction fee per deal. Additionally, each coupon comes with an expiry date.

Some like dance classes and holiday trips could be invalid after a short period, say, 30 days, so be sure to use it fast. Another drawback is that the consumer cannot buy the product of his choice. One can only choose from the cited deals, whereas in a typical discount store, though the price drop is less, you have the option of selecting the product you like.

Moreover, as buyers can't see a product physically before its delivery, it is important to go through the reviews and feedback to avoid striking a bad deal as most of these sites do not refund or cancel.

While these sites have good offers, there are other discount deals on the Net. Consider these before making an impulse purchase. If you are not comfortable with the online payment model but like the idea of group buying, there are cityspecific sites, such as groupndeal. com and shoppingreps.com, which act as platforms to make online groups and buy offline.

You can also check sites like khojguru. com and dailydeal.in, which aggregate deals from various sites to offer a wide choice.

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