Crazeal, the Indian arm of the world’s largest online group buying site Groupon, has completed its first year of operations in the country. Techcircle.in caught up with Ankur Warikoo, who heads the Indian venture, to get a lowdown on the business directly from the horse’s mouth as several players in this space have either shut shop or pivoted out of deals business. Note that Groupon first entered India early last year by acquiring Kolkata-based SoSasta.com. It was later rebranded to Crazeal (the company is still fighting a legal battle in a bid to use the name Groupon India).
Sharing the comScore statistics, Warikoo said that Crazeal has now become the biggest player in the deals segment in India in terms of number of visitors, followed by Dealsandyou. According to him, the report pegs the site with 47 per cent of the market share, with 54 per cent repeat visitors.
“We were able to achieve this milestone primarily because of two reasons. First, the company has continued to focus only on deals while competitors have been looking at other things (probably hinting at the changing business model of Snapdeal). The other reason is that there were a number of shutdowns in this space as well,” said Warikoo.
How the site is faring
According to Warikoo, Crazeal has been clocking 100 per cent quarter-on-quarter growth and has sold close to 6 lakh deal vouchers over the last year.
He also claimed that Crazeal is now selling a voucher every 33 seconds, which essentially means it is selling over 2,600 vouchers on a daily basis. This is twice the number (1,200) quoted by Warikoo in June this year. The average ticket size of the deals has also increased and currently amounts to over Rs 1,300.
Interestingly, the company does not target youngsters (we mean college-goers and fresh passouts). Instead, it is targeting people in the age group of 24-40. Warikoo believes that this strategy has worked for the company as around 48 per cent of its customers opt for repeat purchase within 30 days of making their first purchase.
The site has featured around 30,000 deals in the past 12 months and has around 10,000 merchants on board. The top-selling deal was a mobile recharge deal that sold 28,000 vouchers while the biggest one in terms of value was a laser eye surgery deal (priced at 30,000) that sold around 114 vouchers. Delhi, Mumbai and Bangalore (in the same order) remain the top three cities for the company as of now.
Deals and categories
In June this year, the local services category comprised 55 per cent of the company’s business, followed by products and travel categories. Local services have now gone down to 45-48 per cent, followed by products with 35-40 per cent and the rest is travel.
Unlike the West where the biggest category is wellness, it is food & beverages in India. However, the fastest growing category on the site is healthcare. While tattoo deals have died down, cosmetic surgery deals have not seen much uptake.
In June, Warikoo mentioned that the group buying deals comprised 15 per cent of the total number of deals on the site and the firm was looking to increase this number, but that didn’t happen. The number of group buying deals has actually gone down to 5-10 per cent and there are chances that it may go down further.
“While group buying is a tried & tested model and works for other geographies, Indian merchants are not that much interested in it. Since we believe that this platform is meant for merchants (unlike others who think that the business is about customers), we keep their interests in mind,” said Warikoo.
Profitability and success mantra
According to Warikoo, the India operations as a standalone business will be profitable by the end of next year, which is an interesting thing to say, considering there has been some consolidation in the deals business in India over the past one year.
Koovs pivoted to become a lifestyle e-commerce firm while Snapdeal has become a horizontal e-commerce marketplace, with deals as an additional business. Hyderabad-based group buying website Dealivore, promoted by ICUMI Technology Pvt Ltd, shut down in April this year.
Chennai-based deal site Masthideals, (part of Sri Jagdamba Pearls Group), which was providing deals for restaurants, spas, resorts and theme parks, seems to have ceased its operations. And Bangalore-based group buying site Scoopstr and Snatchdeal have either stopped transactions or are not operational. 30Sunday is another player that has apparently shut down.
But all these closures follow the first big euthanasia by a VC-funded e-commerce venture in India when e-commerce site Taggle (that had changed its business model from group buying to generic e-commerce in mid-2011), run by Bangalore-based Taggle Internet Ventures, had struggled to survive for some time and then died officially.
So what worked for Crazeal?
“We never take our ‘cut’ beforehand. That is criminal, since you are making money on the merchant’s name,” said Warikoo. This is in spite of the fact that Crazeal charges the full amount upfront from the consumer.
What Warikoo refers to is that Crazeal doesn’t take only the ‘cut’ which may or may not result in a transaction for the merchant (as the consumer may find a better deal or may simply choose to skip the actual purchase), instead, it takes the whole amount upfront which cuts the entire risk for merchants.
In contrast, most deal sites charge a small fee or cut upfront while the consumer is supposed to pay the balance while making the purchase directly from the merchant. But this may not happen as the initial payment is a token amount and the consumer does not lose much if the competitive deal is much cheaper.
“What happens is that a deal-chasing attitude is created, which spells havoc for the merchants,” said Warikoo.
This is bang opposite of what Times Internet’s deal site has to offer. Recently, TimesDeals has chucked the upfront payment model and has become a simple deals advertising site (in effect).
But what is your take on the same? Do you feel that Crazeal has cracked the code or is it still too early to make a judgement? Share your comments below.
(Edited by Sanghamitra Mandal)