Groupon clones ditch business model

Groupon clones ditch business model

Tuesday, Feb 25, 2014

Victoria Ho

The Business Times

AS MORE Groupon clones fall by the wayside, another Singapore contender is turning away from the voucher model to e-commerce.

Three-and-a-half-year-old StreetDeal is one of the oldest in the local group-buying scene and the third largest here, after Groupon and

Groupon is listed on the Nasdaq and Deal’s parent company, iBuy, raised A$37 million (S$42 million) in December on the Australian Securities Exchange.

Mr Gregory Costamagna, chief executive and co-founder of privately held StreetDeal, said that three months ago, the company started holding inventory and selling products on its site using the traditional e-commerce model.

Since then, its revenue has become an even split between its voucher business and e-commerce, indicating the keen reception here to online buying, he said.

Groupon, launched in 2008, was the pioneer of the group-buying craze. Its name, a portmanteau of “group” and “coupon”, explains its business model: it offers users items at bulk discount rates, as long as enough users had committed to a deal for the deal to go through.

Users buy vouchers and redeem the goods and services at the merchants later, while the voucher site takes a cut of the revenue from the merchant.

But as the tide turned away from vouchers, both Groupon and LivingSocial, the two largest sites globally, started selling goods on their sites as well.

StreetDeal operates in Singapore, Malaysia, Thailand, the Philippines and Indonesia and has about 1.1 million subscribers.

Mr Costamagna said he intends to continue having vouchers on the site because cheap deals draw users in. Many of these users end up spending money on the products once they are on the site, so having vouchers alongside the e-commerce play is complementary, he explained.

But the site may end up relying more on e-commerce as its bread and butter because the “Groupon” model is costly to upkeep.

“Finding merchants to participate is costly. I need staff on the ground to talk to spas and restaurants, and maintain that relationship,” Mr Costamagna said.

In Singapore, Groupon contenders like MediaCorp’s Mocca Perks, Hungrydeals by HungryGoWhere, JigoCity and by ComfortDelgro have all gone the way of the dodo.

Mocca Perks, JigoCity and Gobblerdeals were some that died in 2012.

Ms Elyn Ho, spokesman for NTUC Plus!, said the company’s BigDeal site has “evolved and is now a non-commercial business entity”. The website now lists the union’s activities and events instead.

While the gleam of voucher deals continues to fade, free coupons appear to be the next big thing.

In the United States, Groupon and LivingSocial dangle discount coupons on their sites in order to get users through the door.

Groupon has 26,000 free coupons covering retail outlets like Old Navy and Macy’s. LivingSocial has about 20,000 coupons, and includes retailers like Best Buy and Guess.

Last year, Google Offers, another Groupon clone, stopped selling pre-paid vouchers and moved to free coupons offering discounts on goods and services.



About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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