In the West, one Internet service offering online deals to consumers is already a web and financial sensation.
In Ukraine, its clones are helping many people move closer to enjoying the same lifestyle they had before the economic crisis. Globally, this startup is about surprise and saving money.
The buzz is about Groupon, the Internet merchant based in Chicago, which sells discounted deals for various services, from restaurants to bungee jumping.
The basic idea is simple: Websites offer their subscribers 50 percent or more discount off a sushi dinner or spa treatment, but the deal only kicks in once a certain number of people have bought into it. The business gets free exposure, if not extra revenue. The customers get deals. Groupon or the knock-off firms that broker the deals get their cut of the action.
As inflation continues its relentless pounding on pocketbooks, many people are cutting down their expenses, helping push the popularity of these online discount and deal-of-the-day warehouses.
Everybody wins, except perhaps traditional venues for advertising – television, radio and newspapers.
As inflation continues its relentless pounding on pocketbooks, many people are cutting down their expenses, helping push the popularity of these online discount and deal-of-the-day warehouses.
The idea sprang in the United States in 2008 and quickly expanded into more than 44 countries. Groupon’s business model became so popular that hundreds of clone sites soon took off. According to Forbes, the company is on track to make $1 billion in sales faster than any other business ever.
In Ukraine, there are a number of sites that offer similar services: SuperDeal, Gorod24, KupiKupon and Biblion are among those that surprise their subscribers with daily discounts. Pokupon is one of the biggest merchants, claiming a half-million users since its launch a year ago.
Deena Malkina, an American citizen who grew up in Kyiv, learned that 77 percent of Groupon’s customers were women and decided to start her own business – BeautyBloc.com – focused specifically on beauty-related deals.
“Selling at such deep discounts is a good business for those vendors who have low marginal costs,” explained Malkina. “For example, a salon has the fixed cost of rent and salaries, but very low marginal costs of products. So if their appointments are not being filled, it makes business sense to sell these slots at a discount rather than not sell them at all.”
Through her service you can even cash out in Ukraine purchasing a $120 gift set of skin and body care products for $49. After adding $20 shipping costs, it will still be less expensive than its face value in the U.S.
A key to being a good business in the long term is growing the subscribers’ database and finding great deals that customers are interested in, Malkina said. A customer that first discovers a product or service at a big discount has a great experience and comes back to pay the full price later.
For companies such as Groupon it is also a good business. They get a percentage of every purchase. Groupon, for example, takes half of every sale. Ukrainian Pokupon takes 20 to 30 percent.
This mechanism of collective discounts is really a breakthrough in advertising for small businesses. Earlier, there was no marketing mechanism that would attract customers through the Internet and work instantly [in contrast with traditional prepaid advertisements].
– Oleksandr Lastovsky, head of Pokupon
“I really fall for the discounts,” said 21-year-old student Maria Rydvan, who buys coupons and certificates with money off several times per month. “Even if I do not plan to buy something, when I see a discount, I think: why don’t I buy it?”
Another student, Svitlana Kisiliova, 20, said she likes the idea of group discounts very much but still does not understand why deals are so cheap and how the websites earn money. “I have a feeling that there is a trick somewhere,” she said.
“This mechanism of collective discounts is really a breakthrough in advertising for small businesses,” said Oleksandr Lastovsky, head of Pokupon. “Earlier, there was no marketing mechanism that would attract customers through the Internet and work instantly [in contrast with traditional prepaid advertisements].”
But not everything’s always smooth and sterile with discounted deals. Sometimes customers don’t receive coupons through their email on time or don’t get them at all until they complain to customer service. The biggest problem is that coupon owners sometimes get second-hand treatment.
“For ordinary clients they deliver sushi at any time of the day, but for those with a discount – when they have free time,” said Rydvan describing her experience with a sushi restaurant.
Pokupon managers encourage users to report on these cases and promise to cancel partnerships with these companies. Customers dissatisfied with the product can ask for their money back through their web-account and can use them for another deal.
Find best discounts in Kyiv at:
http://pokupon.com.ua
www.superdeal.com.ua
http://gorod24.com.ua
Kyiv Post staff writer Oksana Faryna can be reached at [email protected]
