Online group buying a 'sustainable' business

SINGAPORE--In spite of the growing number of online daily deals sites here, the market is far from hitting saturation point and has moved beyond fad to become a sustainable business.

Karl Chong, CEO of Groupon Singapore, told ZDNet Asia that as long as market players continue to have innovative ideas and consistently meet the changing needs and interests of consumers, this space can be "a very sustainable business".

The executive was speaking at a press event here Tuesday to elaborate on the company's business strategy, following Groupon's December acquisition of Beeconomic, a local online daily deals startup he co-founded in May 2010. The company was later renamed Groupon Singapore.

The local site today clocks 150,000 hits a day, according to Chong who declined to disclose the current number of subscribers but said it is "definitely in the hundreds of thousands".

He estimated that there are now at least 20 daily deal sites in Singapore since Beeconomic first started, but said the market will not hit saturation point any time soon.

Using the analogy of an upside-down funnel, he said the industry here has evolved from the first level of early adopters, comprising "deal hunters and geeks", to the middle level which encompasses mostly young professionals and trendsetters and "where there's a huge market to be tapped ".

The final level is the "mass market", and where Groupon Singapore is striving to become a "household name where even moms" use its service, he added.

"People who don't know about Groupon are typically from the older [demographics], but they have online spending needs as well. My mom uses Amazon to buy books and I [now] want mom to use Groupon to find out the next restaurant deal for the weekend.

"I don't believe there will be [market] saturation this early...not until parents and senior managers are using local daily deal sites. Then, we got to start thinking, 'now how do we innovate and further differentiate ourselves'," he said.

Convenience to differentiate from clones
According to Chong, Groupon Singapore has in store "a couple of innovations" this year to differentiate itself from other "Groupon clones". For one, the company later this month will launch a free Apple iPhone app which will allow consumers to buy groupons "on-the-fly and in an instant" via their mobile device.

Users login to their Groupon account to choose the deal they want, select the "buy" button and confirm the quantity they want. A unique barcode and numeric code will be generated, and presented to the participating merchant which has a list of codes of each buyer. The merchant can either scan the barcode or manually cross-check the code number on the mobile coupon, and upon redemption, press the "marked as used" button on the app.

Mobile users can use the app to check for and redeem deals any time that is convenient for them, Chong added. Groupon is also testing the app to run on the Android operating system but the immediate rollout will be for the iPhone, he said.

The company is also looking to localize its deals, which is "something none of our competitors are doing", he noted. Such efforts mean that deals can be made available in Singapore's central locations such as Orchard Road, and Groupon members will also receive more relevant deals based on their locations they frequent including the suburbs, he explained. He added that this feature will be rolled out in all neighborhoods in Singapore by the end of this month.

The company's "Visa Exclusive Deals", launched Mar. 28, is also part of its efforts to provide users more "experience-oriented deals", such as offering complimentary champagne at a restaurant that also has other discount deals on the main Groupon site.

Impact of Groupon branding
Chong acknowledged that Groupon's acquisition "changed the face of Beeconomic", giving the former startup "immediate credibility that other Groupon clones do not have". It also provides the financial support and links to relationships with premium brands previously established overseas, he said.

Because of Groupon's success in the United States, local branches of global businesses approached its Singapore office to emulate the success here, Chong said. "The [global] brand of Groupon made it easier to work out a deal with them," he added.

According to Chong, brands that have a "huge affinity with Singaporeans" such as G2000, Fox, Subway, Quiznos, Tully's Coffee and Breadtalk have inked exclusive partnerships with Groupon's local team.

The company in March worked with the local franchise owner of seven Subway outlets here, selling 41,805 groupons within 48 hours, he said.