Group shopping warms up in India

14 January 2011

NEW DELHI: Competition in India's nascent online group shopping sector is rising rapidly, as international players like Groupon and eBay battle a range of domestic rivals.

Groupon, headquartered in the US, pioneered the model of negotiating deals with brand owners activated when orders are secured from a predetermined number of consumers.

It boasts 50m subscribers in 40 countries, and has now purchased SoSasta, created by India's Friday Media, as part of a wider expansion into several emerging economies, including Israel and South Africa.

"Collective buying is in its infancy in India … and we see strong potential," said Rob Solomon, Groupon's chief operating officer.

"Groupon is shaping the way local merchants market themselves in every corner of the world."

SoSasta's deals are made available in 11 cities across India each day, and Ananya Bubna, Groupon's Indian managing director, suggested substantial growth opportunities exist.

"India currently has 75 to 100m internet users and that's a huge market," he told Livemint. "Ecommerce has hit an inflection point where it's just about taking off.

"We have seen huge activities in travel portals and all the other wards are catching up as well, so this is really a good time for Groupon to enter the market."

"Re-branding Groupon is the way going forward, but we are also looking at what makes sense for India."

Amitabh Saran, ceo of BuzzinTown, which runs a broadly equivalent service, estimated that annual ecommerce sales in the Asian nation had reached approximately $50bn (€38.1bn; £31.8bn).

"We have been using email marketing effectively for user acquisition, communication with the user in the form of newsletters, deals etc," he argued at a recent conference.

"Another aspect that has worked to our favour is that we believe in data mining and directing appropriate deals and ads to the end consumer."

Kunal Bahl, chief executive of Snapdeal, a competing platform, reported the Indian populace directs around $100bn to discretionary purchases a year.

"If you were to migrate even 2% of those spends online, it's a $2bn market," he said.

"We welcome new players in the market, especially large global ones, because it is further validation of the fact that there is a strong market which is growing very fast."

In an additional indication of how this trend is gaining traction, eBay has launched a similar web-based property in India, called Social Shopping.

"The deals are win-win: our merchants get new customers, advertising on our site and large volumes of buyers; in return, our customers get an attractive irresistible deep discounted deal," the company said.

"Since we avoid storing inventory and save businesses lots of advertising costs, we all get to save compared to paying up for retail."

Data sourced from Groupon, Livemint, 2Indya; additional content by Warc staff