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Group 2 : Kinshoo (40) |Adheeth(01) | Arisha(32) | Amrapali(34)

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History of group buying

Group Buying is based on a Chinese concept called Tuangou.

The popularity of the strategy in China is often attributed to the

Chinese tradition of bargaining for the purchase of goods of all types

Group buys can also be variation of Tuangou buying that also occursin China, in which an item must be bought in a minimum quantity

or dollar amount, otherwise, the seller will not allow the purchase.

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What is group buying?

Several people - sometimes friends, but possibly strangersconnected over the internet - agree to approach a vendor of aspecific product in order to haggle with the proprietor as agroup in order to get discounts. The entire group agrees to

purchase the same item. The shoppers benefit by paying less,and the business benefits by selling multiple items at once.

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Group on-the mother ofdeals

Groupon is a deal-of-the-day website

Launched in November 2008, Chicago

The idea was created by Andrew Mason

Groupon features a daily deal on the best stuff todo, see, eat, and buy in more than 300 marketsand 35 countries.

Groupon Origins Groupon grew out of a websitecalled The Point, a website launched in November2007 that lets you start a campaign asking peopleto give money or do something as a group.

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Groupon is growing fast with a projected revenueof $500 million for 2010. At just under 2-years oldin April of 2010, the company was valued at $1.35billion.

Groupon also owns several internationaloperations,

the European-based MyCityDeal (17 May 2010)

the South American Clan Descuento (22 June 2010) the Japanese service Qpod.jp Russian Darberry.r

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Group Buying Features

COLLECTIVE PURCHASING POWER:

A group buys products at a lower price,

which were previously available athigher price.

New price suits every individual &

also fulfills individual needs. Benefits of bulk discounts.

Gives volume business to dealer too.

WIN-WIN situation for both.

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The company serves one Grouponin each of the markets it serves.

If a certain number of people sign upfor that offer, then the deal becomesavailable to all.

If the predetermined number is notmet, no one gets the deal that day.

BUSINESS

MODEL

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CUSTOMERSIGNS UP @DEAL SITE

DEALREACHESCRITICAL

MASSCUSTOMERS

PAY DEALSITE

DEAL SITEFEATURES

DEAL

CUSTOMERREDEEMS

COUPON @MERCHANTDEAL SITE

PAYSMERCHANT

SHARE

MERCHANTSIGNS UP @

DEAL SITE

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Deep Discounts

Discover services/merchandise that

they didnt know of Access to new services/merchandise

Smaller side deals in addition to the

main deal Deal personalization based on

voluntary disclosure of preferences

Deals divided up by ZIP code

BENEFITS TO

CUSTOMERS

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Early Adopters: Highly affluent withdisposable income

Urban Females 18-34 years

Likely FACEBOOK & TWITTER users

60k-200k users/city

100-1000 deals/users/city

CUSTOMER

DEMOGRAPHICS

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High fixed business High customer acquisition cost

Business thriving on repeatcustomers

BEST SUITED

BUSINESS

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24-hour period

The viral nature of this promotion

means that sales can be on the orderof hundreds to thousands of orders ina single day.

Revenue: Retains ~50% of deal minuscredit card fees

Redemption Rate: ~80%

Incremental Spending: Gap

MERCHANT

ECONOMICS

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Contd..

Business owner makes only 25% profit. Willing to take short-term loss because:

v Cash flow boost.

v Not everyone will redeem their voucher.

v Inexpensive, effective advertising.

v New customers & Return customers.

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KEY ISSUES

TODAY

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Taobaos Amazing Deal

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Taobao.com, a Chinese group buying website made history by selling 205Mercedes-Benzsmart cars in 3.5 hours in October 2010.

Original price of car: RMB 176,000Taobao offered a 23% discount for group purchase (RMB 40,000 discount on

original price )Down Payment : RMB 1,000

The first car was sold after 24 seconds, 55 cars were sold after six minutes and

205 cars were gone after three and a half hours.

http://www3.mercedes-benz.com/mbcom_v4/xx/en.htmlhttp://www3.mercedes-benz.com/mbcom_v4/xx/en.html

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Indian Group Buying Sites

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Founder and Team : Anisha SinghFunding Source: PE firm CX Partners + USinvestorsWhen Launched: 2009Website Ranking: 17,989Employees: 34 employees

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Founder and Team : Kunal Singla andKanishk ShuklaFunding Source: SELF-FUNDED (about Rs10 lakh)When Launched: 2009Website Ranking: 18982Employees: 12 employees

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Founder and Team : Guneet Singh andHarish Bahl

Funding Source: Group Buying Global AGWhen Launched: 2009Website Ranking: 7506

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Founder and Team : Satish MadhiraFunding Source: Self-funded (Rs 10 crore)

+ AngelWhen Launched: 2010Website Ranking: 23978

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Founder and Team : John Kuruvilla, UjjwalTickoo and Tej Arora

Funding Source: US investorsWhen Launched: 2010Website Ranking: 32073Employees: 20+

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Founder and Team : JasperFunding Source: Self-funded and fromINDO US venturesWhen Launched: 2010Website Ranking: 1008Employees: 230+ employees

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The Buying Process

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Coupons IVR Telephonic

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Backend of a Clone

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The BiG Mommy hasEntered India

Groupon has Bought Sosasta.comand has entered india as GrouponIndia Pvt Ltd.

The value of the deal is not known

Its more of a talen acquisition ratherthat customer base

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Many more Players

Its easy to start a clone site

Zapak and many more players toventure into

Expect TOI, IBNLIVE, NDTV etc tofeature a deals section soon

How many will survive?? Big money!!!

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Thank You