When the founders saw the 150 Mercedes Benz sold for large discounts, the idea of Groupdrop was born. Back then, it was just a passing thought, an appreciation of the idea. Six years later, and in the ecosystem we currently swim in, Groupdrop became a reality. At its core, the idea was ‘group buying.’ One product for five, 10 products for 40. Everything is sold this way, then why wasn’t anyone already doing it?
The fact is, Group buying websites have globally been in existence since 2008. In India as well, several websites like Mydaala.com, Dealsmagic.com, Masthideals.com, Taggle.com, GrOffr.com etc had tested the waters of bulk buying since 2009. And with the introduction of GroupOn in India in 2011, many of these websites shut shop while some changed their business model altogether. Fundamentally, we felt, the idea was phenomenal. We knew that it had been tried before, but we also knew that it could be done better. So what went wrong with them? And what could GroupDrop do differently to not just survive, but to prosper among it’s peers?
What Went Wrong with the erstwhile Group Buying Websites?
Predominantly, all Group Deal websites draw their revenue through commissions that the merchants, vendors and manufacturers pay them for each new customer that they get. Barring the big players, most merchants have limited marketing options like Bulk SMSes, Flyers or registering themselves on Vendor aggregator websites like JustDial or Sulekha. Since they’re new and trying to find their feet, they’re ready to bend over backwards to get new customers than to not get any at all.
For some websites, storing bulk inventory of a plethora of goods becomes a problem – space and invested capital, for others, getting a steady flow of customers for such bulk deals is challenging. Because a deal-hungry customer will rarely repeat the website. He will buy wherever he gets the best discount. Some websites, perhaps got lost in translation and got their priorities mixed up of who their main focus was – the merchant or the end consumer! Many of these websites accepted that the cost of getting a consumer ran much higher than the revenue that he generated for them.
Both the approaches had their merits, but none balanced the scale well enough, and thus, failed.
So, how could GroupDrop differentiate itself from the others?
First and foremost, GroupDrop, as a concept, stringently steered clear of mass products – low end items that are offered dime a dozen on a host of other websites. The founders were very specific on the kind of products they wanted to offer the customers. It would have to be big ticket products that customers wouldn’t normally get a deal on. They would also have to ensure that the cost of inventory is minimized while genuinely interested customers get the deal they desire. In addition, they had to ensure the website is interactive, informative, engaging and keeps customers coming back, either to buy more or to advise fellow customers.
Thus began the ideation of a holistic business model that would safeguard the interest of the merchants while empowering the customers to get the deals of choice. And this had to be achieved, also, while keeping in mind the basic desire to succeed and proliferate as a business idea.