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Did the expected ban on ecommerce discounts make CouponDunia add cashbacks to its model?

(by Sneha Johari and Nikhil Pahwa)

Times Internet* owned CouponDunia is now giving users cashbacks for shopping via the site, apart from also offering discounts. This is particularly interesting in the context of the recent notification from the Indian government on ecommerce, which stated that:

“Ecommerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field”

So, does this mean that coupons, which are an indirect way of influencing the sale price of goods and services, will no longer be allowed? In that sense, is this Coupondunia’s way of pivoting to cashbacks from discounts, once the policy is applicable? Coupondunia founder Sameer Parwani says this move has nothing to do with policy changes.

“We made the decision to go cashback months ago, before the FDI rules were announced. Cashback is where we want to be whether or not e-commerce marketplaces find a way to continue deep discounts or they don’t”, he says, adding that “If they do continue deep discounting, then the coupon part of our site remains strong and we’ll continue to have a strong funnel of users who first look for coupons and then get pulled into cashback. On the other hand if deep discounting does end, then the only way to save online will be via cashback and therefore the offering becomes even more valuable for consumers.”

Perhaps it’s not even indirect discounting
CouponDunia receives a commission when users shop via their site, which it gives back to users in the form of a cashback. In this way, the cashback or discount comes from CouponDunia and not the ecommerce marketplace, and they can continue even if the government views cashbacks from ecommerce companies as means of discounting. Note that the cashback is termed as “CouponDunia cashback” and can be withdrawn into a user’s bank, mobile wallet or used to recharge online.

Logically, the marketplace can just increase commissions when they want to offer more discounts. So, the only shift, in our opinion, is that they will have to rely on a third party aggregators like CouponDunia to offer discounts.

Some metrics
We’re not sure of relevant ecommerce GMV (Gross merchandise value) is as a metric for CouponDunia’s own financial performance, but the company claims an annual GMV of Rs 1,000 crore, and is trying to grow that to Rs 4000 crore this year. It also says it has 2.5 million downloads and is targeting 7.5 million, though active users is probably a better metric to check than downloads. CouponDunia says it gets 10 million monthly visits, aggregates coupons from 2,000 online brands and has 7.5 million email subscribers.

Previous CouponDunia developments
In June 2015, CouponDunia launched an in-store, hyperlocal couponing system where users would be able to buy items in offline stores using CouponDunia’s coupons in categories. In March 2015, the company tied up with Hindi news portal Raftaar to offer online coupons in Hindi. The Mumbai headquartered company was founded in 2010 by Sameer Parwani and acquired by Times Internet in May 2014.

Developments in online couponing in India:
– In February, Gurgaon based deals and coupon website Cuponation raised a little over $11 million in a Series B round of funding.
– In January, coupons and cashback deal website Cashkaro raised an undisclosed amount in funding from Ratan Tata in his personal capacity 2 months after it raised ~ $3.78 million.  In May 2015, Cashkaro tied up with China’s Alibaba Wholesale to offer up to 1.50% cashback on products listed on the website.
– In November 2015, Mahindra Comviva launched an Android and iOS app called Zerch, which offered local deals and product discovery in Bangalore and Delhi-NCR.
– Groupon (worldwide) reported more than 0.51 million active deals globally for the quarter ended June 30, 2015 (Q2FY15), up from 0.24 million in the same quarter last year. In India, Groupon raised money from Sequoia Capital and was rebranded to Nearbuy in August 2015.
– In May 2015, the IRCTC partnered with coupon site Mydala to offer deals and offers across categories.

Also read: Why the Pricebaba offline model failed; our learnings – Annkur P Agarwal

*Disclaimer: Times Internet is an advertiser with Medianama

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