By Irene Tham
Digital Life reporter
itham@sph.com.sg

 

Watching the counter tick at group-buying coupon websites can be as exciting as monitoring the stock market - especially when what you are eyeing, is a huge discount for a long-awaited travel package or restaurant deal.

On March 16, some 42,000 Singaporeans zoomed in on a Subway deal that offered buyers any 6-inch sandwich worth up to $6.50 at half the price. Some $140,000 changed hands that day alone. If this doesn't demonstrate the power of group buying, I don't know what does.

Group buying coupon web deals are all the craze these days. Since May 2010, some 20 similar websites have popped up.

Groupon Singapore is the largest of them with some 300,000 subscribers, contributing 'millions' of dollars of sales a month. The Subway deal that saw a whopping 42,000 coupons sold, was the deal-of-the-day at Groupon Singapore.

Group-buying sites work by sending subscribers daily alerts about massively discounted deals. There must be a minimum number of people taking up the offer and paying in advance before it can be activated.

Typically, Groupon Singapore collects half of the proceeds as its commission.

KEEPING DEALS FRESH

For this concept to be sustained in the long term, however, the deals must be fresh and what people desire at the time they are marketed.

Fatigue can set in no matter how bargain-hungry consumers are. For instance, if a site markets nothing but spa packages, how many more people will sign up after a month of being bombarded by heavily-discounted spa packages?

Having exclusive deals is also the way to go - something that Groupon Singapore has done right.

Its exclusive partners in Singapore include Subway, Starbucks, Quiznos Restaurants, Tully's Coffee, BreadTalk, Fox and G2000. What this means is consumers cannot get the same deals on other competing group-buying coupon websites like Deal.com.sg and Liveoffcoupon.com.

Groupon Singapore's 29-year-old chief executive Karl Chong attributed the ease of inking these deals, to Groupon's brand name. As reported first in The Sunday Times, Beeconomic was acquired by US-based Groupon in a US$24 million ($30.2 million) deal in December. Since then, Beeconomic has taken on Groupon's name.

'On our own, we couldn't have done that,' said the co-founder of Beeconomic, who sold majority shares in the company to Groupon in 2010, barely six months after it started operations.

The other fledgling websites ought to take note. This may seem like a lucrative business with a low start-up cost, but it still needs some serious firepower to succeed.

Groupon in the United States has Starbucks chairman, president and chief executive Howard Schultz and Peter Barris, managing general partner of venture capitalist New Enterprise Associates, on its board and global partnerships with brands like Starbucks, Subway and Tully's Coffee.

It will be interesting to see how the various Davids in the industry fare against this Goliath.