Grabbing a great deal: Web apps offering deals, discounts boom once again

  • Sunny Sen, Hindustan Times, New Delhi
  • Updated: Jan 21, 2016 17:00 IST
No longer do online companies focus on selling at huge discounts, but the key is getting local merchants online – it is about delivering local deals based on consumer insights and data. (REUTERS)

It now seems like another age. The year was 2009 and opening an online deals business was in vogue. In no time 70 odd deal companies like Flipkart and Snapdeal mushroomed, but the hype lasted for less than two years.

These sites sold deals for just about everything – from restaurants to gyms and salons, dancing lessons, body art and adventure sports – sometimes at 95% discount. However, “by the end of 2011, everybody went away. Everyone was jumping ship – not one person stood around,” says Anisha Singh, CEO and co-founder of Mydala, one of the two deals companies that withered the storm. The other one was Groupon, now called Nearbuy, after the global group buying firm decided to exit India last year.

Not only has Mydala survived, is has also turned profitable. However, the business has changed. No longer do they focus on selling at huge discounts, but the key is getting local merchants online – it is about delivering local deals based on consumer insights and data.

For example, companies will show what deals are available in Connaught Place based on your location or push notifications based on your social media behaviour. “Earlier, thousands of coupons were sold but they were non-personalised. We are building alogorithms based on social network mapping to service customers better,” says Srinivas Nidugondi, head of mobile financial solutions at Mahindra Comviva that owns Zerch, one of the new crop of deal apps.

In the last two years, the once crashing business has quadrupled – from $25-30 million in 2013 to $100-150 million in 2015. Experts say the offline demand of such services is $1.5 billion, which will go up to $5 billion in the next few years.

“We closed our best year ever, at Rs 400 crore. All over the world product e-commerce has preceded services e-commerce, not the other way round. Now, we will see a lot more offline services coming online,” says Ankur Warikoo, CEO and co-founder of Nearbuy.

Mobile phones were the game-changers that made business more hyperlocal as an increasing number of users sought offers in the vicinity. “We don’t talk cities, we talk neighbourhoods – we touch 36,000 neighbourhoods. There is so much depth in each of these markets,” says Singh.

Before, the average time difference between buying a deal and redeeming it was three days. That window has now shrunk to 12 hours, and about one-fourth of the deals are consumed within the first the hour of purchase. People are also travelling less than one-and-half kilometers to consume the deal.

The market change has also brought investors back, and how. The success of Meituan-Dianping was fairly instrumental. China’s largest group deals site, it raised $3.3 billion round at a valuation of $18 billion on Wednesday. “The China market created a wave and revived the deals space, worldwide,” Singh says.

In India, Nearbuy got $20 million from Sequoia Capital early last year. Mydala is rumoured to be in talks with Baidu for a $100 million fund infusion. And then there are a rising number of startups in the deals business. Companies like Zerch and Little are finding a firmer footing in the business with the use of technology. “By March, we will do Rs 1,000 crore worth of deals. We already have 50,000 active deals,” says Manish Chopra, CEO and founder of Little, a deals’ startup.

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