The online group deals in India space has witnessed a sudden flurry of activity over the past couple of weeks: two acquisitions and one funding. Several group deal websites have mushroomed in India over the past six months, mirroring, the launch of local YouTube clones three years ago, or more recently, the local business listings/search space. Group-deals, rather group-buying sites, aggregate buyers eying the same deal from a merchant, thus giving the merchant scale in terms of sales, and offering the customers a discount. Discounts can be as high as 80% on the maximum retail price. The three deals have been announced in the last two weeks:
– Deals and You: a venture from Group Buying Global AG (promoted by Dr.Klaus Hommels & Oliver Jung) and Harish Bahl of Smile Interactive, acquired group deals startup WanaMo.com, a few months after its launch; our sense is that, given that it was a rather young business and (we assume) a limited user base, it was acquired for the team, and having a product and merchant relationships that would reduce time to market. Bahl and Group Buying Global also own another premium deals business – FashionAndYou.com.
– Taggle: A group buying startup founded by John Kuruvilla is believed to have received a commitment of $8.75 million in funding, based on certain milestones, from Greylock Partners and Battery Ventures. Reports in VCCircle and Pluggd.in. Remember that Battery Ventures recently invested in group buying company GroupOn, a round funding that valued the company at $1 billion.
– SnapDeal Acquires Grabbon: Jasper, a multi-channel direct marketing platforms company in India which also owns group buying site SnapDeal.com with a presence in 8 cities, has acquired a peer – Grabbon, a group buying site operating in Bangalore.
This many deals in a space still in its infancy in India is quite surprising. To me, that’s indicative of a few things:
– More fundings, acquisitions or closures: investors and Venture Capitalists believe that the GroupOn model can be emulated in India, and are looking at this as the next big opportunity to build large competing businesses, the way they backed airline ticketing businesses. It’s been a while since there was a first round of funding for a business in India, and this segment has attracted backing where others haven’t.
– Battle for scale: city by city, neighborhood by neighborhood. Because there’s money backing competitors, it will be difficult for a bootstrapped business to survive and/or compete, unless they get better deals for consumers. Expect more fundings or acquisitions (primarily for geographical expansion) in this space. And some companies being shut down.
– Battle for deals: there’s eventually going to be a battle for deals: Great deals attract consumers. Period. So the companies able to get better deals will get the consumer, and the companies that get the consumer will get the more deals. Getting more deals, better deals, will mean more competition between deal sourcing sites, hence the risk of lower margins.
– Meta Aggregation: that there will eventually be a meta aggregator in the deals space, curating or enabling search for the best deals in this space. Already, Ixigo aggregates travel deals.
Update: KhojGuru aggregates group discounts, and has its own exclusive discount coupons as well, covering 8 cities. Nitin Gupta, co-founder of KhojGuru says that they are an affiliate partner with group buying sites, and get paid on every transaction.
The One HUGE Positive
Is that this will lead to an expansion of the advertiser base for Internet businesses in India – it will bring quite a few first time and experimental advertisers to Internet. Remember that Internet advertising in India has largely been the mandate of agency drivel driven, national level, large advertisers. For all the anecdotes about biryani shops buying advertising at 6:30pm on search, bringing local businesses online and expanding the advertiser base, has been a struggle. The downside of these deal sites, if course, is that this is all performance driven advertising, not always the best model from a publisher point of view.
We’ll have notes from an interview with Harish Bahl, who, alongwith Group Buying Global AG acquired Wanamo, up shortly.