July 14, 2010 at 20:24Ukrainian group discount services: market analysis
This year for Ukraine was marked by the beginning of a way out of the crisis. Offline entertainment gradually began to raise its head and a new, but already successful online distribution model came to their aid: collective purchases . In just a few months, 6 fairly ambitious startups were launched . We decided to study more deeply the situation prevailing in this still emerging market.
In some cases, the size of discounts can reach 90%- for example, users of the Buyon service, in honor of its launch, had the opportunity to take advantage of a 92% discount! This causes some public concern, which is not yet used to the new model and continues to discuss on the Internet: whether group discounts are a “divorce” and what, in fact, is the benefit of such services.
First of all, how to make sure that group discounts are not a divorce ? Firstly, it is enough to call the company, which is a partner of the action and whose services are advertised on the main page of the service. All these companies are public and well-known, ask them to confirm the fact of holding such a promotion with discounts. Secondly, this business scheme has quite successful experience in the USA (Groupon.com)where the industry of discount coupons that are cut from newspapers and magazines has a half-century history. Thirdly, the cornerstone of the reputation of such companies are user reviews on social networks, and it’s easy to find them.
The fact is that the sale of services at a discount is actually a form of advertising campaigns, which is aimed at attracting a new audience. The bet here is that users who have purchased coupons will like the establishment and they will become its regulars . Such a sale does not at all aim at enrichment in the short term.
This is a new advertising format that focuses on the social recommendations and advertising capacities of the reseller, that is, the seller of coupons, and he, in turn, provides information and advertising support for promotions. Such advertising costs the seller less than traditional media, and its effectiveness and positive response is much higher.
The profit of the service lies in the difference between the maximum possible discount provided by the seller and the final discount that is declared on the site during the campaign. For example, bowling agrees for advertising purposes to provide a discount of 90% for 10 people. The counterparty puts out a 75% discount on the site and puts 15% in his pocket. This is how it works.
The first startups selling discounts in Ukraine were Coupon and SuperDeal , launched in April-May. Pretty soon after them, another 3 Ukrainian projects opened: Gorod24, Cheap & Now and Mojo . One of the last to enter the Ukrainian market was the Russian Darberry service , which has existed since March of this year.
Such intense competition testifies to the deep faith of developers in the chosen business model. But only that. You need to understand that in fact this type of business is much closer to offline than to online. Just building a site and maintaining it is not enough.
A simple example: the Russian experience, which has a slightly longer history than the Ukrainian one, testifies to the frequent complaints of users about the quality of the services provided. This comes from insufficient communication between the administration of the institution providing the service and the management of the service selling coupons. In most cases, such incidents are successfully resolved by those companies that care most about their own reputation.
So the cornerstone here arethe physical presence of representatives in the regions , the ability to negotiate with partners and a quality user support service.
As the competition grows, very soon potential partners will orient and begin to choose discount services more meticulously. One of the startups who will be able to offer them the best conditions and a large audience will remain on horseback. And in this sense, those who started earlier have some advantage: a good start is half the distance. The audience is made up of the popularity of the service, advertising and positive user experience. Anyone who succeeds in building a recognizable brand will automatically win the competition.
As you can see, Darberry is the leader in terms of total audience size. However, one should not forget that the service is Russian, and the share of Ukraine in it is only 2 cities out of 14 covered. Therefore, adjusted for geography, this place should be allotted to Kiev Kupon.
The Gorod24 project has a very impressive coverage of the audience in Ukraine, however, by the frequency of the actions carried out with such coverage, one gets the impression of not yet well-functioning work with partners. Definitely, for doing business throughout the country it is important to have an office in the capital. This gives a great advantage when working with large partners.
For successful business development, it is important to follow the principle that states: “lost money is lost money”. This is especially true for an online business, in which the factor of spontaneity of purchase is important. To increase the number of sales, it is vitally necessary to provide users with maximum opportunities to quickly and conveniently pay a coupon. What in this sense do working group discount services offer?
It can be seen from the table that most of all the methods of paying for a discount voucher are offered by Buyer - the only one, by the way, who provides the possibility of making mobile payments. Other systems use standard solution sets of the most popular payment systems and aggregators, which to some extent characterizes their attitude to the issue of user convenience.
In terms of aggregate assessment parameters, it is precisely Buyon who has taken the most active start today, is actively expanding the geography of users and is launching outdoor advertising campaigns in each new city. By the way, this is the only service that has taken care of translating the interface into Ukrainian.
Speaking about what awaits the market as a whole - most likely this is an increase in the presence of leaders in most regions of Ukraine, the appearance of small local projects and their gradual crowding out. Over time, the awareness of partners about the service will increase and they will begin to cooperate more willingly. The counterparties' trump card will be the minimum discount from the seller , which will be covered by reducing their own profits so that users do not lose interest in stocks.
Author: Andrey Maydanik, specially for Habrahabr (I just formatted and published)
What are group discounts?
The business model of collective purchase services or, as they are also called, group discount services, is that users have the opportunity to purchase a coupon for a promotional visit to a movie theater, restaurant, gym or beauty salon with a significant discount: at least 50% of the cost . If the minimum required number of users takes part in the action, it will certainly take place.In some cases, the size of discounts can reach 90%- for example, users of the Buyon service, in honor of its launch, had the opportunity to take advantage of a 92% discount! This causes some public concern, which is not yet used to the new model and continues to discuss on the Internet: whether group discounts are a “divorce” and what, in fact, is the benefit of such services.
First of all, how to make sure that group discounts are not a divorce ? Firstly, it is enough to call the company, which is a partner of the action and whose services are advertised on the main page of the service. All these companies are public and well-known, ask them to confirm the fact of holding such a promotion with discounts. Secondly, this business scheme has quite successful experience in the USA (Groupon.com)where the industry of discount coupons that are cut from newspapers and magazines has a half-century history. Thirdly, the cornerstone of the reputation of such companies are user reviews on social networks, and it’s easy to find them.
The fact is that the sale of services at a discount is actually a form of advertising campaigns, which is aimed at attracting a new audience. The bet here is that users who have purchased coupons will like the establishment and they will become its regulars . Such a sale does not at all aim at enrichment in the short term.
This is a new advertising format that focuses on the social recommendations and advertising capacities of the reseller, that is, the seller of coupons, and he, in turn, provides information and advertising support for promotions. Such advertising costs the seller less than traditional media, and its effectiveness and positive response is much higher.
The profit of the service lies in the difference between the maximum possible discount provided by the seller and the final discount that is declared on the site during the campaign. For example, bowling agrees for advertising purposes to provide a discount of 90% for 10 people. The counterparty puts out a 75% discount on the site and puts 15% in his pocket. This is how it works.
The popularity of discounts is growing
The advantageous aspects of this model are gradually beginning to be understood by more and more potential partners, and this suggests that the group discount services have a future. However, it is most likely not for everyone.The first startups selling discounts in Ukraine were Coupon and SuperDeal , launched in April-May. Pretty soon after them, another 3 Ukrainian projects opened: Gorod24, Cheap & Now and Mojo . One of the last to enter the Ukrainian market was the Russian Darberry service , which has existed since March of this year.
Such intense competition testifies to the deep faith of developers in the chosen business model. But only that. You need to understand that in fact this type of business is much closer to offline than to online. Just building a site and maintaining it is not enough.
A simple example: the Russian experience, which has a slightly longer history than the Ukrainian one, testifies to the frequent complaints of users about the quality of the services provided. This comes from insufficient communication between the administration of the institution providing the service and the management of the service selling coupons. In most cases, such incidents are successfully resolved by those companies that care most about their own reputation.
So the cornerstone here arethe physical presence of representatives in the regions , the ability to negotiate with partners and a quality user support service.
As the competition grows, very soon potential partners will orient and begin to choose discount services more meticulously. One of the startups who will be able to offer them the best conditions and a large audience will remain on horseback. And in this sense, those who started earlier have some advantage: a good start is half the distance. The audience is made up of the popularity of the service, advertising and positive user experience. Anyone who succeeds in building a recognizable brand will automatically win the competition.
Audience Comparison
All collective shopping services rely on social recommendations. They open representative offices in the most popular social networks and attract users, which affects the number of subscribers to their channel. One of the most popular social networks in Ukraine are VKontakte and Twitter . We estimated the number of subscribers of each service in order to get an idea of the audience reach of each of them.| Service | In contact with | |
|---|---|---|
| Darberry (darberry.ru) | 7918 | 1085 |
| Coupon (pokupon.com.ua) | 6448 | 259 |
| SuperDeal (superdeal.com.ua) | 4392 | 98 |
| City24 (gorod24.com.ua) | 2975 | 19 |
| Cheap & Now (cheap-and-now.com.ua) | 640 | 187 |
| Mojo (mojo.com.ua) | 8 | 45 |
Geography of discounts
More likely to gain a foothold in leadership positions has one of the startups that will cover a large geography of the audience. This will make his proposal for cooperation interesting not only for regional, but also for network companies. However, this is not so simple, because it requires intensive and controlled work of representatives in the regions. To date, the geography of distribution of group discount services is as follows:| Service | Dislocation | Representative Offices |
|---|---|---|
| City24 | Kharkiv | Crimea, Dnepropetrovsk, Donetsk, Kiev, Nikolaev, Odessa, Simferopol, Kharkov, Kherson |
| Coupon | Kiev | Kiev, Lviv, Kharkov, Sevastopol, Odessa, Donetsk, Dnepropetrovsk |
| Superdeal | Kiev | Kiev, Dnepropetrovsk, Donetsk, Kharkov, Odessa |
| Darberry | Moscow | Kiev, Kharkov |
| Cheap & now | Kiev | Kiev |
| Mojo | Dnepropetrovsk | Dnepropetrovsk |
User friendly
The design and usability of the majority of the projects under consideration are executed at a sufficient level and do not cause any particular complaints. But the tricks in order to force the user to register are not always unambiguous. For example, Coupon and Darberry offer users bonuses for attracting users through an affiliate program. But SuperDeal forces you to register with a annoying pop-up window.For successful business development, it is important to follow the principle that states: “lost money is lost money”. This is especially true for an online business, in which the factor of spontaneity of purchase is important. To increase the number of sales, it is vitally necessary to provide users with maximum opportunities to quickly and conveniently pay a coupon. What in this sense do working group discount services offer?
| Service | Payments |
|---|---|
| Coupon | Visa / Mastercard (LiqPay), Privat24, Terminals (Interkassa), Webmoney, Substation Unified Wallet, SMS (SMS Online) |
| City24 | Visa / Mastercard (LiqPay), NSMEP (Interkassa), Privat24, Webmoney, Terminals (Interkassa) |
| Superdeal | Interkassa, bank payment, cash, terminals (Interkassa) |
| Darberry | Visa / Mastercard (LiqPay), Terminals (Interkassa) |
| Mojo | Visa / Mastercard (LiqPay), Privat24, Terminals (Interkassa) |
| Cheap & now | Interkassa, Webmoney, cash |
Conclusion
Comparing the capacities and potential of the services under consideration, it is necessary, of course, to take into account the fact that some of them barely started. However, almost all of these startups are quite young, and therefore already now the growth dynamics of their audience and the number of shares held allows us to confidently identify the three leaders: these are Cupon, Darberry and SuperDeal . Despite Darberry’s strong position in Russia, the intensity of his work with Ukrainian partners does not allow him to confidently claim first place.In terms of aggregate assessment parameters, it is precisely Buyon who has taken the most active start today, is actively expanding the geography of users and is launching outdoor advertising campaigns in each new city. By the way, this is the only service that has taken care of translating the interface into Ukrainian.
Speaking about what awaits the market as a whole - most likely this is an increase in the presence of leaders in most regions of Ukraine, the appearance of small local projects and their gradual crowding out. Over time, the awareness of partners about the service will increase and they will begin to cooperate more willingly. The counterparties' trump card will be the minimum discount from the seller , which will be covered by reducing their own profits so that users do not lose interest in stocks.
Author: Andrey Maydanik, specially for Habrahabr (I just formatted and published)