Group 2 : Kinshoo (40) |Adheeth(01) | Arisha(32) | Amrapali(34)

History of group buying

• Group Buying is based on a Chinese concept called Tuangou. 

• The popularity of the strategy in China is often attributed to the

Chinese tradition of bargaining for the purchase of goods of all
types

• Group buys can also be variation of Tuangou buying that also occurs

in China, in which an item must be bought in a minimum quantity
or dollar amount, otherwise, the seller will not allow the purchase.
 What is group buying?
• Several people - sometimes friends, but possibly strangers
connected over the internet - agree to approach a vendor of a
specific product in order to haggle with the proprietor as a
group in order to get discounts. The entire group agrees to
purchase the same item. The shoppers benefit by paying less,
and the business benefits by selling multiple items at once.
 Group on-the mother of deals
• Groupon is a deal-of-the-day website
• Launched in November 2008, Chicago
• The idea was created by Andrew Mason
• Groupon features a daily deal on the best stuff to do, see, eat,
and buy in more than 300 markets and 35 countries.
• Groupon Origins Groupon grew out of a website called The
Point, a website launched in November 2007 that lets you
start a campaign asking people to give money or do
something as a group.
• Groupon is growing fast with a projected revenue of $500
million for 2010. At just under 2-years old in April of 2010, the
company was valued at $1.35 billion.
• Groupon also owns several international operations,
– the European-based MyCityDeal (17 May 2010)
– the South American Clan Descuento (22 June 2010)
– the Japanese service Qpod.jp Russian Darberry.r
 Group Buying Features
• COLLECTIVE PURCHASING POWER:
A group buys products at a lower price, which were
previously available at higher price.
• New price suits every individual & also fulfills
individual needs.
• Benefits of bulk discounts.
• Gives volume business to dealer too.
• WIN-WIN situation for both.
• Power of the group.
 BUSINESS MODEL
• The company serves one “Groupon” in each of
the markets it serves.
• If a certain number of people sign up for that
offer, then the deal becomes available to all.
• If the predetermined number is not met, no
one gets the deal that day.
 CUSTOMER
SIGNS UP @
DEAL SITE

DEAL REACHES
CRITICAL MASS

CUSTOMERS
PAY DEAL SITE

DEAL SITE
FEATURES DEAL

CUSTOMER
REDEEMS COUPON
@ MERCHANT
DEAL SITE PAYS
MERCHANT SIGNS MERCHANT
UP @ DEAL SITE SHARE
 BENEFITS TO CUSTOMERS
• Deep Discounts
• Discover services/merchandise that they didn’t
know of
• Access to new services/merchandise
• Smaller “side deals” in addition to the main deal
• Deal personalization based on voluntary
disclosure of preferences
• Deals divided up by ZIP code
CUSTOMER DEMOGRAPHICS
• Early Adopters: Highly affluent with disposable
income
• Urban Females
• 18-34 years
• Likely FACEBOOK & TWITTER users
• 60k-200k users/city
• 100-1000 deals/users/city
 BEST SUITED BUSINESS
• High fixed business
• High customer acquisition cost
• Business thriving on repeat customers
 MERCHANT ECONOMICS
• 24-hour period
• The viral nature of this promotion means that sales
can be on the order of hundreds to thousands of
orders in a single day.
• Revenue: Retains ~50% of deal minus credit card fees
• Redemption Rate: ~80%
• Incremental Spending: Gap expectation that
customers will spend more once in store
• Repeat customers: 22% repeat business
 Contd..
• Business owner makes only 25% profit.
• Willing to take short-term loss because:

Cash flow boost.

Not everyone will redeem their voucher.
Inexpensive, effective advertising.
New customers & Return customers.

What’s in it for the collective buying sites? – Group buying

sites typically take a 50% cut on each voucher that is sold.
KEY ISSUES TODAY

“SIDE DEALS”

LEARNING CURVE

TOO MANY DISCOUNTS

REDEMPTION OVER COUPON

LIFE TIME
Taobao’s Amazing Deal
Taobao.com, a Chinese group buying website made history by selling 205 Mercedes-Benz 
smart cars in 3.5 hours in October 2010.

Original price of car: RMB 176,000

Taobao offered a 23% discount for group purchase (RMB 40,000 discount on original price )
Down Payment : RMB 1,000

The first car was sold after 24 seconds, 55 cars were sold after six minutes and 205 cars were
gone after three and a half hours.
Indian Group Buying Sites
Founder and Team : Anisha Singh
Funding Source: PE firm CX Partners + US investors
When Launched: 2009
Website Ranking:  17,989
Employees: 34 employees
Founder and Team : Kunal Singla and Kanishk
Shukla
Funding Source: SELF-FUNDED (about Rs 10 lakh)
When Launched: 2009
Website Ranking: 18982
Employees: 12 employees
Founder and Team : Guneet Singh and Harish Bahl
Funding Source: Group Buying Global AG
When Launched: 2009
Website Ranking: 7506
Founder and Team : Satish Madhira
Funding Source: Self-funded (Rs 10 crore) + Angel
When Launched: 2010
Website Ranking: 23978
Founder and Team : John Kuruvilla, Ujjwal Tickoo
and Tej Arora
Funding Source: US investors
When Launched: 2010
Website Ranking: 32073
Employees: 20+
Founder and Team : Jasper
Funding Source: Self-funded and from INDO US
ventures
When Launched: 2010
Website Ranking: 1008
Employees: 230+ employees
THE BUYING PROCESS
• Coupons
• IVR
• Telephonic
BACKEND OF A CLONE
 The BiG Mommy has Entered India

• Groupon has Bought Sosasta.com and has

entered india as Groupon India Pvt Ltd.
• The value of the deal is not known
• It’s more of a talen acquisition rather that
customer base
 Many more Players
• It’s easy to start a clone site
• Zapak and many more players to venture into
• Expect TOI, IBNLIVE, NDTV etc to feature a
deals section soon
• How many will survive??
• Big money!!!
Thank You