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If done in the right way, deals biz does work out: Ankur Warikoo, CEO of Groupon's Indian venture Crazeal

5 Jun, 2012

If you thought 'deals' are dying down and the industry itself is on the verge of extinction, here is a rejoinder.

Many players may have shut shop (read our story here) and some of the large players could have pivoted to being horizontal ecommerce firms. Big deal?

So, why is it that the Indian arm of world's largest online group buying site Groupon is sailing into the rough weather? Who better to post this query than Ankur Warikoo, CEO of Crazeal. Groupon entered India by acquiring SoSasta and later rebranded the site to Crazeal (it is still fighting a legal battle for using the name Groupon India). Warikoo spoke to on the churn in the industry, the missing parts of cracking the deals business and plans for Crazeal.

Groupon was late in entering India, which explains your strategy to come through an acquisition. Groupon India domain name is under litigation but since SoSasta was re-branded as Crazeal, is there any scope at all to switch again in the future to the mother brand?, the name did not have relevance with the non-Hindi speaking customers. The premium merchants whom we were working with had an issue with the implied meaning of 'SoSasta', or 'so cheap', so we changed our name and the whole re-branding was done. In November 2011, we went through an official rebranding exercise and that is also when we moved to the Groupon US technology platform.  In hindsight, there was nothing special about SoSasta. It was just the fastest way to enter the market.  And, for the Groupon name, well it is still under litigation so now we are only authorised to use the brand name in our communication, but the domain name battle is still being fought. Maybe some time in future we will be able to rename ourselves as Groupon India.

Crazeal is one of the few players still in the deals business.  Is there some piece of the puzzle that everyone else missed in the business?

Deal space is dying in India because no one is getting it right. It needs to be evaluated why deals business in India is dying, when it is flourishing in other places. I feel it's mainly because of bad choice of business models. Our business model is entirely different from what the Indian sites are doing. It adapts the same Groupon US model. Though we were tempted to try out what the Indian sites are doing and adopt that business model, we stuck to the original recipe. Our model is different in many ways. We don't do the token money deals. So, we will not ask for a token amount for a deal and rest to be paid to the merchant directly. We take the full amount from the customer and pay the merchant ourselves. What this does is to instil confidence with the merchants since we are sharing the risk and secondly bringing in only genuine buyers. There is no other deal site in the whole country that works on the full price model, which if you ask me, is tragic since that shows only short term focus on the business. Secondly, we don't bombard the customers with deals every day. We do have various deals in our mailers but 'deal of the day' is one and that has been constant. The biggest differentiator in our portal is that we are merchant focused rather than buyer focused. So, we choose our merchants very carefully and we ensure that they get serious buyers. Also, we try to get them newer customers by not allowing the same buyer to buy a deal twice. These points make the model that we follow and that is how we are doing just fine in the deal business.

In India group buying per se doesn't really exist. What is your view on group buying viz plain deals as a business model?

The reason why group buying is not there in India is that the merchants don't yet understand the concept. Here, merchants are happy with the publicity and marketing they get along with the customers. Still, 15 per cent of our deals have group buying, where the deal only becomes active when a certain minimum number of people buy it. We are looking to enlarge that in future and incorporate more of group buying.

Share some numbers with us, how many deals are you selling a day? How has it grown from the SoSasta days?

We would not share the exact numbers, but you can say that we are doing one transaction per minute on any given day. And, we have grown tremendously. Initially where we were doing just 200 transactions a day, the number has grown almost six times now.

Which segments are the hottest selling and how about product deals?

Product deals are a part of the model since we acquired SoSasta. However, at that time the focus was on electronics, which other sites also thrive on, but now our focus is on fashion and home. It is an exciting segment for us.

Apart from that we focus on impulsive products. We will sell anything and let market give us feedback.

Out of the three categories- local services, products and travel, local services comprise 55 per cent of our business, currently dominated by restaurants (50 per cent). Products comes next and then travel.

Would Crazeal be seen going the pure-play product e-commerce way in the future?

No. Our company vision is very different.  We want to be the operating system of small and medium businesses and deals is a way of doing that. Our model will not change. The others are changing their models and what they are selling because their motives are different. Our motives are already defined. We believe that if done in the right way, deal business does work out.