‘ INDIAN CONSUMERS ARE DEMANDING ’
By: Sapna Nair-Purohit Dated: June 01, 2014
Daily deals website GroupOn, after tasting success globally, launched in India in 2011 – first as SoSasta.com, then as Crazeal.com and finally as GroupOn India. Despite its many re-branding exercises in less than two years, low-key communication, and numerous other e-commerce players vying for the same consumer’s attention, the company has managed to create a niche for itself
Sachin Kapur, Chief Marketing Officer, GroupOn India, talks about what sets apart the Indian consumer from others, what goes on behind the making of a deal, and how innovative deals can be the best form of advertising. “From a customer perspective, we decided that we’ll not go berserk with advertising,” says Kapur.
What are the things that GroupOn did differently, considering its late entrance in the deals space in India? What has the company learnt globally?
As a matter of fact, we learnt more from the Indian market. We observed that companies had what is called an ‘obsessive customer focus’. They were getting the customer at any cost without realising the value the customer would actually deliver to their businesses.
We focused on the ‘merchants-first’ approach. We thought if we get quality merchants, it will differentiate us and get us customers automatically. The merchant will be very particular about the kind of experience that he gives his customers because he is a big brand name himself. From a customer perspective, we decided that we’ll not go berserk with advertising. Several Indian IT professionals who had been our customers in the US, became early adopters and influencers for us. We focused on giving them the best experience ever.
So, good merchants and good experience with the customer is what really took off. It took us time. People would ask us why we weren’t pumping money into advertising. We did a lot of experiential marketing campaigns instead of the regular ATL and BTL campaigns. For instance, we started off with a tie-up with PVR cinemas. People who bought movie tickets had to share their email ID, for receiving regular communication from GroupOn, and would get free Pepsi and popcorn. It was instant gratification and we got people to sign up on GroupOn.
A lot of our innovative deals got us popularity. We launched a deal for Delhi — for example, Nirula’s signature hot chocolate fudge for Rs. 49. The amount of buzz we got from that was unreal. Some were reminded of their school days, some were going to Nirula’s after 15 years to just have their dessert. Nirula’s witnessed the highest sales ever on that day — 6,000 vouchers in four hours.
When you say ‘merchants first’, is there a process by which you decide which merchants to partner with?
Yes. We have a very comprehensive process for that. There’s a business development team that reaches out to the merchants. Then there are city planners whose job is to spot trends in the city, find out what people are discussing, and make deal orders. Our business development guys sometimes double as mystery shoppers. So if they go to a salon, they’ll first go as a customer, have a haircut there, and see how the service is. We do thorough background checks. We find out if a deal is available somewhere else. Lot of our business development and sales guys come from the F&B sector and related sectors, so they know how it works; whether the Dal Makhni at a certain restaurant should be served to the customer or not. We get a lot of business feature requests, on an average 30 requests a day. Only 2 or 3 of those finally get featured.
So, finalizing a deal is a big deal…
Oh yes. We do curated deals. We don’t offer a straight 50 percent off. If it’s a food deal, we look at the menu, select the best from the menu, and tell the merchant what to include. We have had some global learning as well, such as what sells in a spa or what would reduce the entry barrier for the customer. If you’ve never been to a spa, you might not opt for a full-body massage initially, you may want to go in a head massage, or a foot reflexology... and that’s really the entry point.
Every customer loves discounts. What dissuades them from availing them on sites like yours? Is it lack of awareness?
It could be factors like, ‘oh, I’m not a discount person. I have more money than patience’, or whatever. Or it could be fear that I will be treated inferiorly if I go with a discount coupon. These are things we control very strictly from the merchant’s side because we run a full-price model where the customer pays us the entire amount of money. We retain our share and remit it to the merchant, so we control a lot of customer experience in that sense.
A lot of it has to do with the quality of merchants and the processes they follow. We’re talking about top-end merchants. If it’s a 5-star hotel, they won’t treat anyone badly. It’s built in their DNA to treat everyone well. It also has to do with the kind of customer who is walking in. A Rs. 49 deal buyer is different from someone who buys a Rs. 999 deal, in terms of demographics.
The way we market ourselves, is very different. If you search ‘Delhi deals’ on Google, you might not see a GroupOn ad.
We don’t go after deal-seekers. If you look for spas in Delhi, you’ll probably find a GroupOnad. That’s because we are talking to the guy who is looking for an experience, not for a deal. So there’s a lot of selection we do, in terms of how we acquire our customers.
On GroupOn, the price points are high and the brands are bigger. For our Delhicious Week deals, we have Delhi’s top-end restaurants that almost have a snob value. They would never come with a discount.
We ran a deal with the Taj Hotel, one doesn’t expect a Taj meal to be on discount. We do specific curation there to ensure that the brand value is retained. So the kind of customers we get are the kinds that the merchant/establishment is looking for. Globally, close to 40 percent of GroupOn’s customers end up going back to these establishments, even after there’s no deal running anymore.
Which are some of the categories that work well and which don’t as much?
We have three business verticals — local, travel, and goods. Close to 45 percent of our business comes from the local vertical, 40 percent from goods, and 15 percent from travel. Local comprises food, F&B, spas, and stuff that one finds locally. We are aware that in travel and goods there is a lot of competition. But in local, we are the only one. We’ve carved our niche. In travel, we focus a lot on city getaways or weekend getaways.
What’s the demographic profile of customers who transact with GroupOn?
It is fairly interesting. Over 80 percent are between the ages of 22 to 35 years. 65 percent are married. Almost 65 percent of them are post-graduates while 75 percent of them own a four-wheeler.
How’s your customer in India different from a customer in another country?
Indian customers are fairly value-driven. They have been spoilt for choice by a lot of competition. Customers in Malaysia are happy with a 15-day delivery because the delivery is free. If we say ‘free shipment’, people are happy and willing to wait that long because there are no benchmarks there, unlike in India, where companies offer same-day delivery and 9-hour delivery. So, the Indian customer is definitely very demanding.
Outside of India, customers are very knowledgeable. You can’t take them for a ride, the laws are very stringent.
For example, in Dubai, if what you’ve mentioned on the deal is even slightly different from what the customer gets at the end, it means havoc for the brand.
You can’t use advertising messages that are over-promising or misleading. People do a lot research before buying products. So customers are more informed in other countries. You can’t sell them hanky-panky stuff like some companies in India do. I once ordered a Blackberry phone and ended up with a Blackcherry phone!
What are the opportunities in the space?
I would rather talk about the opportunities that can help us grow. E-commerce is limited to travel and products in India. We are looking at local commerce which is a very big market. We identify it as a trillion-dollar opportunity globally. Local retail is a fabric which is nicely embedded in our society, no matter how many Walmarts of the world we get. The local kirana shops and shoe shops will never lose importance. GroupOn wants to be an operating system for local commerce.