[We recently asked a question: Is There a Business Model in Deal Aggregation Space? and while we looked at what deal aggregators are up to in India, here is a guest article by PJ on what could be the business model behind deal aggregators for Indian market.]
Movie 300 – One of the most inspiring scenes, when King Leonidas asks his army – Spartans, what is your profession? (video ).
Post the series of daily deal sites that have come up in India (or across the world) – there are many deal aggregation services that have been launched. There are on going debates – is there a business model for deal aggregation services?
While daily deals and coupon services are growing in India and else where – many users/customers of daily deals services as well as critiques of this business models have complained that people usually end up buying things that they do not want or would not have purchased otherwise. Which is little illogical because you buy it for the deep discount – and you buy it by your choice.
My example – I am a regular eCommerce transactor – at least 10-12 product/books (non-travel) transactions per year. However I am yet to buy a deal/coupon as most services are offering deals that are not relevant to me or not close to my location. As a consumer, here is my take – I will not be interested in a coupon that gives me Rs 200 off at a restaurant in Andheri (Mumbai). The economics does not work for me, total travel time of 4 hours, commuting cost between Rs. 100 to 500 depending on mode of travel and accessibility of the service provider.
There are two primary needs of consumers in this space that are not yet solved completely:
- Relevance of the Deals
- Location of the Deal
While this is the problem that most daily deals and coupon services are themselves trying to address – the aggregators can do a better job at this for following reasons:
- Most deal sites are limited to anywhere between 1 to 5 deals at any given time. That limits their reach to about 5-10 suburbs in a city like Mumbai (Mumbai + Navi Mumbai + Thane) or Delhi (Delhi + Gurgaon + Noida)
- A deal aggregator can get such 5 deals from 5 different websites – and will have 25 deals to showcase and in most cases the span of reach will be wider – about 20-30 suburbs (which covers 40-50% of Mumbai)
The above statement is very logical, however deal aggregators now have to think beyond just aggregation and focus on distribution of such deals to relevant audience – relevancy by deals and location. At least in India, it may not be the daily deal websites that can take this business hyper-local but definitely the deal aggregators can if they wish to.
If deal websites are focusing on – Deals in Mumbai; aggregators should focus on Deals in Andheri, Bandra, Chembur, Colaba, Ghatkopar and more!
My two cents – Business model for Deal Aggregators should not be aggregation of deals. That is a simple job and that is minimum expected out of them. Your business model should be Distribution – distribution of deals, thats where they start testing their capabilities and adding value to the ecosystem!
What’s your opinion?
[Reproduced from PJ’s blog.]
