Is Free Commodity? Interview with Timesdeal on Business Impact After Free Deals

While pundits debate over sustainability of deal centric business models, some still believe that there is enough space in the segment as Indian consumers continue to hunt for value.

One of the proponents of the deal business, Times Internet Limited, which runs, had earlier turned the business upside down by making it free for consumers.

Until then, deal sites used to charge customers upfront so as to avoid the hassle of collecting money from individual merchants later.

The Indian deal space has seen frantic activity in the last few months. Crazeal (previous Indian arm of Groupon) rebranded as after resolving prolonged legal dispute over ownership of domain name. The Chicago based company recently launched TV commercials too.

To figure how it panned out for Timesdeal, NextBigWhat spoke to Ninad Takpere,Business Head,Timesdeal. According to Takpere, since rollout of free deals in October, the company witnessed a 4x growth in terms of user visits and crossed 2 million users mark last month.

While Google trends which shows the search volume via Google search engine  suggests decline of Timesdeal’s search volume, Alexa shows that the sites traffic has gone up by more than 160 % in the last 3 months.
Edited excerpts from the interview:

NBW:What’s the Timesdeal traffic, conversion and confidence of consumers after making the deal free.

NT: Ever since we launched Free Deals in Oct ’12, we witnessed tremendous surge in consumer interactions. We have grown 4 times in terms of user visits in last couple of months and crossed 2 million mark last month. We witnessed more than quarter of a million deal vouchers being taken by consumers during the festive period. Our subscribers saved over Rs. 100 Crores by now through the deal vouchers they took from our site. All of this gives us lot more confidence in the directional change that we adopted.

NBW: During an earlier interaction with NBW, Satyan Gajwani the CEO of TIL said that you are still figuring out the business model. Can you bring more clarity to that?

NT: Honestly we are still in the phase of building meaningful interactions between consumers and merchant and helping many more of them discover far more exciting deals. What we are pretty clear of is that we would like to build as a strong platform that facilitates consumers to grab fabulous deals and merchants to promote their offerings easily. We would like to reach a benchmark level from this perspective before start toying around with different monetization opportunities those could be available. For us the current focus is to get the product right and build a superior destination for end consumers to discover & avail things of their interest and liking.

NBW: Based on your analytics, how are merchants taking to it?

NT: The earlier experiments had given us some insights to take up this change but last two months have been very exciting for us since consumer’s response has been beyond our expectations. We are able to deliver over 10 times the results to our merchants with the help of free deals consumers. More often now, we have to take the deals out of our site since they get sold out in matter of no time. Though the redemption ratio has taken a beating, in absolute terms we are delivering far bigger results to our merchants in shorter period of time which is the success story. We are experiencing larger number of happier merchants who are willing coming back to us with renewed deal campaigns.

NBW: Timesdeal now collects no upfront payment. So in what way has the decision affected Timesdeal? What are the redemption percentages like?

NT: It was not easy to make the decision on sacrificing the core revenue stream which was 20-40% of the deal value coming to us upfront. Though we have done away with this significant revenue we are able to get lot more interested consumers coming to our site looking for free deals and larger no of merchants willingly participating on the platform looking for new customers.

This is quite a powerful proposition that we are able to make to both the parties. While consumers get free deal vouchers from our site, they are not worried about committing to something they’ve never had before and yet know that these vouchers will always be honored. These are exclusive deal vouchers and not coupons which are otherwise available everywhere.

We get to see that there are merchants who got as high as 90% vouchers redeemed by consumers at the same time few merchants are happier even with 30% redemption with dozens of consumers. We are further strengthening our platform & working far more closely with merchants to enable consumers to redeem the vouchers seamlessly. The fact that most merchants are willing to renew their deal campaigns now with us is the testimony of free deals working for them to get increased business.

NBW: What is your outlook on deal centric business models in India in 2013?

NT: From Indian context, there has been and continues to be demand for consumers to get value. ‘Save money’ is imbibed into every Indian consumer right from early days of his life and all of us look out for deals to do so. Most deal sites have been facing challenges in terms of a revenue model that makes sense to consumers, merchants and them.
We expect many deal sites to innovate further in this space or pivot towards product ecommerce that has been a trend which may continue next year too. Many will chase to become aggregators in the space by leverage e-commerce site coupons and act as customer acquisition platform for them. The next year is certainly going to be challenging in the deals space since most of the sites would have made decisions on the next course of action looking at recent past & dynamics of the deal sites in developed nations.

NextBigWhat for Timesdeal?

Timesdeal made deals free for consumers, however, we don’t understand the logic behind dishing out free deals forever. Usually, a free model is adopted by businesses to drive sales for shorter period of time [ like festive sale, occasional freebies]. Will Timesdeal’s free to all move work? Will it address or even create a totally new segment in the market? Is free a commodity when it doesn’t have an expiry date, a sense of urgency?

Here is what Ankur Waikroo, CEO, Groupon India had to say

Honestly I don’t know what to make out of this. We (Groupon) are not in any panic mode – not even close to it. To be frank – and this might seem to be a little boasting around – we are not deterred by the Indian players or the hoopla they create around zero deals. It is not the zero deal that matters, it is the service that does. It is the experience that matters and that is what the customer will always go back to. It is definitely an advantage to the customer as long as the deal has nothing hidden and the experience is great. However, the question always is ‘are you doing something that you can do forever or is it a gimmick or a short term effort that cannot be sustained? And will your customers still come back when you offer something for a higher charge?’ For me it is a marketing campaign and if it is their business model I cannot really comment on it. We wouldn’t do it till the time it is sustainable.

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