Group Buying Sites: A Fad, A Trend or Here to Stay?

Group buying and daily deals sites should logically do really well in India. Indians never shy away from a good deal. GroupOn’s success in USA spurred a number of similar sites to start operations in India. Over the last two years quite a few players have entered the Indian group buying and daily deals space, including Snapdeal, Mydala, Koovs, DealsandYou, etc. None of these sites really have a differentiating factor. A few niche group buying sites, like Vamoose, also opened shop here.

A number of these sites attracted funding and the buzz around them was louder than that at a rock concert. In June 2011, according to a comScore report on the online Coupon category, 4.6 million internet users aged 15 and above accessed a group buying or daily deals site in India. This represented about 7% of the total online population at that time. Sanpdeal.com was the top site with close to 1.5 million unique visitors and was followed by DealsandYou.com and Mydala.com, both with close to 1 million unique visitors.

Slowly cracks in the group buying space are becoming evident. A Snapdeal.com might be able to survive for a longer time, but a number of smaller players are either shutting shop or switching to a different business model. Group buying site Taggle was one of the first to stop their group buying services and convert instead to an electronic goods e-commerce portal. SoSasta (GroupOn’s India offering) made more noise for its database leak saga than for its business model.

A ViziSense report revealed that last year between September and October the number of unique visitors to group buying sites dropped by nearly 50%. Snapdeal, which is the number one daily deals site in India, registered a 46% drop in unique visitors. In the same time period online retailers like Flipkart.com and eBay.in saw a spurt in the unique visitor count.

Experts believe that the business model of group buying sites is not sustainable and most of the Indian group buying sites has poor customer redressal mechanism. We need to wait and see if with time these can stabilize in India and grow in the same way as some of the online retailers.

Watch out this space for more updates about the group buying space in India.