2011 witnessed the rise of daily deal sites in India (the last count being 25?) and now that the honeymoon is over, the marriage surely seems to be on-the-rocks. Most of the funded deal sites have ‘pivoted’ to ecommerce avatar and the ones who are left are dying a slow death.
Dealivore recently shut shop with the following message:
The last one year has however seen significant changes in the marketplace-we were outrun by a vastly funded company that executed well. On the other hand it has also become the norm in the industry to create inflated deals/pricing/discounts often with little regard to the end customer. The one thing we never wanted to do was to have regrets of having run a business that deliberately provided deals that were not fair. We don’t want to provide our customers such deals. This has made it hard for a self funded company such as dealivore.com to continue to source true value deals for customers.
And Dealivore is not the only one – most of the other deal sites are facing similar challenges and importantly, the ‘daily deal’ category is going through a rough phase.
As part of our series on deal sites, here is the first installment – an interview with Alok Kejriwal (Founder & CEO of Games2Win) and Kunal Shah (Founder & CEO of Freecharge.in) on the daily deal business and the road ahead.
Pluggd.in: Were deals a non-category to start with, truly being a tool, mechanism or feature for e-commerce?
Alok kejriwal: Yes – at c2w we tried this model 12 years ago – freebies to attract traffic. Our end goal was getting advertisers attention – that we achieved (like KBC) – but deals as a lead was not sustainable.
Kunal Shah: I believe mindless copy of any category from west is a non-category in India. It ended up becoming a low-CPA tool later on for most companies. Our geographic distribution and choices are different from West and thus being able to target offers was impossible and not a single company did a good job at it. A CEO got a deal on tattoo and college teen got a deal on 5 star holiday. Eventually both stopped looking at alerts and open rates on emails have reached a new bottom.
Pluggd.in: Is there a play for large, independent deal aggregators going forward? How many?
Alok kejriwal: I dunno. I don’t wake up or live the day waiting for a deal. there is no NEED!
Kunal Shah: I don’t think deals can be an independent category. Deals can be a loss leader but a loss leader alone cannot be business. Indians will always want deals, but the methods will have to be Indianized or thrown/bundled smartly. Do we really wake up and visit a deal site everyday?
Pluggd.in: Are they likely acquisition targets for large retailers? What aspect of a deal aggregator is valuable?
Alok kejriwal: An e-mailing service? :-)) Some call center? the business is STUPID.
Kunal Shah: As stated above, deals are semi loss-leaders and may attract large retailers who may be strained on their own growth. But quality of customers that come along with deal site may not be necessarily help them achieve their goals.
Pluggd.in: Are brands and businesses happy? Why and when do they care?
Alok kejriwal: Consumers love being spoilt. I think businesses in India love extra Business WITHOUT any sacrifice. I think deal sites compensated businesses to ‘give’ them deals. So, consumer and business won. VC got f**ed. Entrepreneur lost his reputation.
Kunal Shah: If the brands and businesses view a deal site as a means to expand their brand presence, they will always feel lost. Groupon world over features ONE deal (importance given) per day versus India deal sites, who are selling deals like a super market. Urgency and Impulse dies due to abundance and no one wins.
Pluggd.in: What kind of growth should one expect in this space? Is there an opportunity to build a pure-play deal site?
Alok kejriwal: I think our consumer base is still very narrow. its not like the USA where we want to sky dive, go on a hot air balloon, learn the piano over the weekend, learn how to sail etc. Deal sites in the USA INTRODUCE ME TO SOMETHING THAT I SAY ‘WOW’!! I MUST KNOW THIS – AND THEN ON TOP GIVE ME AN OFFER I CANT REFUSE. Snapdeal asks me to get my teeth polished all the time. Ok, I eat paan – but do i get my teeth polished EVERY HOUR??????????
Kunal Shah: I doubt there is any pure play deal sites left anymore. Deals may end up becoming feature of many sites but all deal sites are/will look at doing something more than deals. All ecommerce sites are appearing to take the same positioning now, which opens up space for niche players to thrive once again 🙂
What’s your opinion? Given the context of deal sites, what are the other areas you’d like us to focus on?