The power of group buying, which originated in the

US in the late-2008 with sites such as Groupon and

Tippr, allows individuals to benefit from collective
bargaining on the internet which they would
otherwise have not managed individually. If a
desired number of people sign up, a deal is clinched.

cont..
Group Buying relies on the simple economic
concept of buying in bulk to claim a discount;
only, in the online space, you lose nothing if
enough people don’t turn up.

The concept is simple: websites tie-up with sellers

and post a deal where they agree to sell a product
or avail a service at an X% discount provided a
particular number of people agree to pay within a
fixed amount of time
cont..
Group buying is a concept where the marketing
company promises the merchant a minimum
number of customers if the cost of the product or
service is cut by half or more. The customer buys the
deal from the group buying website and gets a
voucher — by email or post — to avail the discount

The number of people can change from 20 to 1000

depending on a lot of factors like nature of the
service to geographic requirements
Group buying sites in
In India, the concept has kick started a new wave of
online retail buying. At least five start-ups, mostly
servicing small and medium businesses, have
emerged in the past nine months — Grabbon.com,
Snapdeal.com, Mydala.com, Koovs.com and
Taggle.com. The US has at least 14 group buying
websites, all of which have come up in the past five
years. The largest among these are Groupon, Adility
and LivingSocial, who boast about 500,000 users
each
KOOVS.COM
PROMOTER: KANISHK SHUKLA
YEAR: 2009 FUNDING: SELF-FUNDED
(about Rs 10 lakh)
NO. OF REGISTERED USERS: 30,000 NO.
OF MERCHANTS: 100
TURNOVER: Less than Rs 1 lakh
SNAPDEAL.COM
OWNER: JASPER (Kunal Bahl, CEO; Rohit
Bansal, COO) YEAR: 2010
FUNDING: SELF-FUNDED and from INDO-US
VENTURES
NO. OF REGISTERED USERS: 300,000
(including Grabbon.com)
NO. OF MERCHANTS: 5,000
TURNOVER: Rs 4 lakh
TAGGLE.COM
PROMOTER: JOHN KURUVILLA
YEAR: 2010 FUNDING: $8.75 MN (in tranches) from
GREYLOCK PARTNERS and BATTERY VENTURES
NO. OF REGISTERED USERS: 6,000
NO. OF MERCHANTS: 11
TURNOVER: NA
 The advantage of such a model from a startup point
of view is that the company makes a profit from day
one unlike a normal service model where they need to
scale up before they can make profits

 Any industry with high fixed costs but low variable

costs and perishable inventory can sell their products
using this model. The merchant gets customers and
it also acts as a form of sampling as it encourages
more people to try out a service while spending less
  A Rs 500-tarot card reading session for Rs 25
 A Rs 1,250-massage for Rs 149
 Rs 200 for 12 sessions of yoga
Grabbon had a deal going that offers a 5-
course lunch at restaurant chain Beijing Bites
for Rs 159
Avatar at Rs.20 at Spice Cinema from Mydala.com
Koovs offered a deal for a package
consisting of two car washes, wheel
alignment and balancing, fuel injector
cleaning, and free pick-up and drop. The
package that would normally have cost Rs
1,299 was offered for Rs 499, a 60% discount
 Certain sites are said to be offering incredible
discounts of up to 80%, at least partly funded by the
sites themselves, in order to drive traffic on to the
sites. "People underestimate the costs involved in
running an e-business and the initial euphoria fizzles
out when profits don't justify the investment both on
the efforts and funds part," says Kanishk Shukla, co-
founder of Koovs.com.
 The margins may seem high at 15-25 per cent, but
as the value of the deals is low, the sites don’t earn
much in real terms.