Comparing Market Scenarios of SnapDeal India and Groupin Pakistan
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The concept of collective buying has really taken the world by storm over the course of the last one year. Inspired by the idea of Groupon (United States), and SnapDeal (India), Groupin.pk has been launched in Pakistan as an online discount shop in order to provide the best exclusive deals in town. Though there are many differences in the socio-economic conditions of United States and India, SnapDeal has still been able to hit it big, acquiring a huge customer base in India.
Discount Shops and the South Asian Consumer Markets
SnapDeal offers exciting discounts in almost 50 cities and claims to hold a user-base of more than 1 million individuals across India. The revenue generated by this portal has been up to the mark as a result and the entrepreneurs have decided to expand their investment plan to above 12 million for this year, which is still expected to rise.
Similarly, Groupin.pk has been introduced as a pioneer of this concept in Pakistan. Many are analyzing the situation and opportunity as to whether it is feasible for customers in Pakistani markets or not. If we compare the market scenarios of SnapDeal India and Groupin Pakistan, we can find numerous similarities such as:
Socio-economic Conditions
The socio-economic factors and constraints in both countries are almost the same. Both countries are developing economies, with more manpower and less work. Moreover, international recession, poverty, low-purchase-power and high-inflation rates have contributed towards discount oriented thinking and more bargaining behaviors in both countries.
Cultural Values & Norms
Similarly, both countries share same cultural values, norms and pattern of behavior due to the geographical proximity. Most of the buying decisions are based on price and maximum benefits a product or service can deliver.
Religious Beliefs
Even the religious beliefs in both countries have a spiritual factor involved also influencing buying decisions, such as shopping on religious festivals and occasions.
Climatic Conditions
The weather situation in the South-Asian countries is almost alike. The seasonal effect on shopping and spending patterns resembles in great many ways.
All these factors contribute greatly to the way SnapDeal operates in India. And keeping SnapDeal’s success in mind, this amazing idea is expected to rise in Pakistan in a similar fashion, especially with Groupin.pk’s emphasis on 50 – 90% discounts in all major cities and much more.
Groupin.pk has recently been introduced in all big cities including Islamabad, Lahore, Karachi, Peshawar and Quetta. The portal is rapidly increasing its user base and is planning to expand its services all over Pakistan. Now the question arises whether it will make a strong user base in the country or will it become a failure?
11:12 am
The market in Pakistan is slightly different than in the US, and India. Also as per two nation theory, we are supposed to have more differences with India than similarities
Anyway…
Group discount is not a new thing in Pakistan. What’s different in this case is that sites like groupin will use a new channel: the internet. Group discount also, has not been very successful in Pakistan as retailers are never convinced that discount is a great idea. You normally see prices going up during holidays instead of coming down. Is discount selling really business in Pakistan? Not really.
So what would be the challenges while spending all energies, just to create a new channel for an old market segment.
First what is groupin up against? Their competition would be other channels, like cable, billboards, newspaper, and even cheap labor readily available to disburse discount coupons. All of them a more cheaper to maintain, and more simpler to manage with seller having more control on what they want to sell.
Second, what is their primary market made up of? Due to low purchasing power, the goods being sold for the mass market are already substandard, with razor thin margins. Forget group discounts on products. Group discount offers through internet are much successful in service sector of the economy, a sector which is quite under developed in Pakistan
Third challenge is going to be the channel itself. Groupin is going to be using internet, a medium non existent for a huge number of Pakistani people, who can neither afford a computer or internet.
Fourth challenge is going to be market maturity. The biggest hurdle is going to be element of “trust” which severely lacks, or is virtually non-existent in market place here. How will one ensure that shopkeepers live upto their commitments? Expecting people to get a deal on some intangible is going to be really messy.
Fifth and the most important challenge is going to be the case in which in case group in is successful, how will they defend their territory? Group discount is a business anyone sitting in a one man shop with a few field hands can create. Group ON and Snapdeal outgrew their competitors through heavy funding and strategic acquisitions. “Funding” in technology start-ups is virtually non existent in Pakistan.
11:41 pm
Do we know the people who is behind Groupin.pk ? They don’t have an about us section. How can we even trust the website?
11:56 am
@Dan: 2 nation theory, seriously? Ru kidding me???
Plz feel free to point out where n how has group discount been offered before in Pakistan!
1st u say its not a new thing, then u say retailers are never happy with it so they never use it! Make sense Dan, if that’s actually ur real name!
Pakistani’s can’t afford computer or internet, i’ll say again, ru kidding me?? Nowadays we’ve got these facilities in villages n small towns even! Boy ur dilusional!
Personally i think its a good concept to be implemented in Pakistan, but they need to be slightly innovative to capture the local market.
12:08 pm
@Sajjad: if u come across their social presence, u’ll get an idea of how big they are!
i dont beleive so that something of this level can be a scam 
1:29 pm
Huzefa, let’s stick to the topic here and not get caught up to ascertain if my name is for real or not. Just putting a “sir name” at the end of a word doesn’t guarantee it to be for real as well. Hence putting a longer albeit two word name doesn’t authenticate yours any different than mine.
Anyway, no matter what part of sector you do get group discounts, from training seminars, to travel, to dinning out, it happens here in the big cities. Group discount has been around since the beginning of markets.
But over here it is a very small minority and not a significant majority that believes it be a viable option to growing business. In this part of the world where it have never been a blazing success. Also people here use traditional channels to role discount products out (if of any significant number), than let’s say internet.
Next, before you boast about internet usage in Pakistan, and are blinded by some patriotic bias, compare it to the other countries around you (like China and India) whose markets have been used for comparison in this posts (http://www.google.com/publicdata?ds=wb-wdi&met=it_net_user&idim=country:PAK&dl=en&hl=en&q=internet+penetration+in+pakistan#met=it_net_user&idim=country:PAK:IND:CHN) All three started from about the same point in 1998, and look how different the picture is after 10+ years. So who is being delusional here?
I just put some points out that might be worth thinking about before mimicking what is happening in other parts of the world, and making slashing assumptions. Who knows this concept might be successful, but will need to wait and see.
6:19 pm
Huzefa,
I didn’t said that they are scam but the way they are promoting themselves by posting self created questions on behalf of users and then posting answers themselves is misleading ..
This makes me believe that I cannot trust them with their word …
Given that you are such a big fan of them – why don’t you tell us who are the people behind this? What makes you believe they will succeed or they have business ethics that we can trust.
2:29 pm
As a small time marketer myself.I feel dan your analysis are quite right, all the three markets are very different and you have provided one of the fact supporting your argument.i completely agree on waiting and seeing how they pull this off.
And yes they need funds to create a cultural movement in a country like Pakistan.There isn’t paypal in Pakistan, lets say they even bring debit card like visa and maestro.Would that help the trust issue? secondly my buying habits ..would they sell them to other companies ? the idea here is how would they change the perception of the consumers? lot of ??????????
But i have to say it would do good for the consumers if the model manages to pull off.
(Huzefa muhammad) i’ll tell you where group discount are present…i’ve carried out deal structuring with businesses on individual bases for corporate clients schools and colleges .lunches,dinners, out door activities etc it works !
by the way looking at your comments it seems you have a great deal of faith in this business model.please tell me are you being paid to do this?your sound biased.
10:43 pm
1st of all i’m the only 1 here with a link to a personal blog that has my entire social footprint, so that pretty much authenticates my identity, n thanks for ganging up on me with more than 1 fake profiles
coming to the topic Dan, there u go sounding strange again, the market in question is Pakistan, what big cities ru refering to when u say “here in the big cities”? ur previous statement that I disagreed with was “Group discount is not a new thing in Pakistan”, n now ur stating that “Group discount has been around since the beginning of markets”.. these are 2 comlpetely diff observations, we’re talking abt Pakistan here, not the rest of the world, stick to ur point buddy.
yes I do agree that we’re way behind china n india, but that makes our growth slow as compared to non existent, which u seem to be refering to.
Sajjad, JD, yeah u can say i’m a big fan of them, as a Social Pakistani
, n a patriotic 1 also I think concepts like this are long overdue in Pakistan n I WANT to have faith in them, as Dan pointed out we’re way behind india n china, so shouldn’t I be biased?? n yes the online transaction part of the picture is going to be a big question mark in the local market, i’m interested to see how they manage to tackle that
3:58 pm
Who will pay Groupin.pk? Collecting paymetns is the biggest hurdle for Groupin.pk
Customers cant pay directly as Online payments are non existent in Pakistan. Paypal doesnst work. Credit cards are owned by a tiny segment of the population, and even these don’t always work online.
This leaves commission collection at merchant’s point of sale. If Groupin.pk collects payments from merchants instead of customers, merchants can easily defraud Groupin.pk by claiming a fewer number of coupons were brought in. Who will verify merchant’s coupons that the customers bring in?
3:54 pm
Wow, I missed this discussion.
Huzefa, groupin is a tricky concept, you are aware that even in US the concept gets its fare share of criticism where people some times feel that the group discount is basically a ripoff for them because only retailers participating in it are the ones not able to compete in quality and service in open market. For Pakistan I can see the following hurdles
1. Level of trust and commitment will be a big question in execution, how many people commit to buying a product and how many actually buy will make the difference in US its easy they book your order through credit card so the surety of hitting the bulk number is good. In Pakistan how ever very few have credit cards and fewer are comfortable using it online.
2. Secondly how to you make sure that our retailers who are already used to selling sub standard product will not use this route to dispose of even lower grade products.
How ever this does not mean it can not be successful we have seen people do wonders, and there are work around for each of the issues, like moving out of the online only crowd to sms population, similarly using pre paid credits and the possibilities are endless. We will again have to see how much of commitment is there, because making this profitable will be some task but if it does click it will be huge.