Are online group-buying sites going the way of the dotcom bubble?
Alekh Angre 17 September 2011

Customer complaints about delays and defective products pile up against online group buying sites such as SoSasta and SnapDeal, but these are simply ignored

It wasn't long ago that group buying and discount cards promised to become the next big thing to happen to the Indian consumer.

Almost everybody who was in business, be they banks, mobile phone and credit card companies, travel sites and online retailers, all felt obliged to ply consmers with third-party discount coupons in order to retain loyalty.

Then there were group buyers whose business model was to nudge customers to those products and services that offered hefty discounts. From SoSasta (of Groupon) to Jasper/ Moneysaverprime/Snapdeal (all part of a single business group) and mydala (funded by naukri.com), Dealface (promoted by consumer review site MouthShut.com and the global Groupon- the choice list was long.

All of them were funded by private equity players and venture capitalists, which meant that revenue and profit was never a concern; the name of the game was customer acquisition. Today, the price of a book purchased through these online stores is usually less than the cost of the fancy packaging and courier charges!

However, hardly has the business begun to stabilise and the complaints are seeping through the cracks. Moneylife wrote recently that the issues with SoSasta have become more of a buzz in cyberspace than the deals it is offering. Till three months ago, Jasper was working overtime to woo corporate customers with bulk deals on its MoneySaver card. But now we hear from the company that it is "no longer issuing new MoneySaver cards". The group has also stopped offering coupons and has widened its scope beyond the e-commerce site www.snapdeal.com that offers the biggest deals on spas, salons and restaurants.

Experts argue that the business model of group buying sites is unsustainable and they criticise the poor consumer redressal mechanism. Moneylife's experience with SoSasta is proof of the extent of the callousness of the company to customer complaints about delay in receiving products or about defective products. (Read, 'SoSasta customers complain about delivery delays, defective products; company ignores complaints'.)

While writing the report, we emailed the company on 12th September for its response on the complaints. Two days later, we received an automated reply from one Kavita who said that the "complaint had been forwarded to the concerned department". Clearly, the email wasn't even read and no attempt was made to separate a complaint from a media query.

A couple of days later, we received another email from SoSasta. This one assumed that our "complaint" was redressed and said, "We'd love to hear what you think of our customer service." It also asked us to "rate the support you received : Good, I'm satisfied, or Bad, I'm unsatisfied". We think the customer service falls into another category altogether - bizarre!

SoSasta is backed by Groupon, the world's largest online group buying business, that was recently involved in a controversy after it admitted that its entire database was 'accidentally' leaked over the Internet and indexed by Google. (Read, 'Groupon's SoSasta.com leaks entire database from India'.)

Group buying and discount cards exist around the world and it could well be that the business in India is facing teething troubles and will stabilise. But until it does, customers must learn to treat the offerings like a lottery-if the offer works it is money saved. Otherwise, wait for the next one that comes along. It doesn't really matter so long as you don't make the mistake of forking out an annual fee for a standalone service that may not be standing anymore!

Comments
Raakesh
1 decade ago
I agree with the author that these numbers are just a bubble!!! When will you acquire customers if you cant give them proper services?? Financial numbers and customer service is very much inter-linked.

check this article http://www.desidime.com/blog/index.php/2... or read websites like moutshut or desidime for reviews on online stores... you will know that websites like snapdeal, letsbuy, bagittoday etc are loosing customers quicker than the time it takes to acquire them... Those numbers may be good to get VCs but in the long run, it will set everything on fire.
Jerome Quadros
1 decade ago
Real estate deals for group buying are featured in http://dealflats.com
Manali Rohinesh
1 decade ago
It's good to see MoneyLife make some noise about this. I had written a blog post about my experience of both the sites mentioned in this article in June - http://seconddealnsteal.blogspot.com/201... - and also mentioned how I had managed to get my money back from SoSasta only after I complained to Groupon. So people should try doing that. VCs should not be funding substandard service providers, whose founders know how to make presentations but don't know how to run a business!
Rohit Kundalay
1 decade ago
To talk about group buying sites in India going the dot com bubble is like comparing all stock market activities to the great depression of 1930s.

This article reeks of insensitive and irresponsible journalistic behavior. The author has just made "customer dis-satisfaction" as the barometer to support his conjecture that all group buying sites are bad.

Group buying sites are doing a great service to merchants and customers. I wonder why the owner of moneylife not improve her own company's customer service.

To call snapdeal a bubble is immature. Bubbles are financial terms not customer satisfaction. Sosasta had security issues but that has been fixed. dealface and mydala are moving cautiously so all is well.

Looks like the author had a better experience. Don't let your personal bias cloud your assesment of the industry.

Ms. Dalal and her team, please do more research before posting such articles. Let the debate continue and don't delete this
MLD
Replied to Rohit Kundalay comment 1 decade ago
The fierceness of this email suggests a personal interest. While your anger about snapdeal and so sasta is overflowing, the companies themselves dont seem as worked up. Our info on snapdeal and jasper comes from the CEO himself.

So why dont you simmer down and tell us, why are you taking this so personally? Are you handling the back end for all these companies?

R Nandy
Replied to MLD comment 1 decade ago
I think I have to agree with Rohit when he says "Bubbles are financial terms not customer satisfaction".I think expecting these startups to have good customer service is expecting too much from them when we see that even India's No-1 private bank and India's No-1 telecom provider doesent even have decent customer service. I think these companies have clearly understood that if one customer goes another will come.India is too bit a market and as such there is hardly any cusotomer protection.So the dirtly details of customer service need not be handled now,the focus should be on the topline.The bigger businesses are a testimony to this fact.
Joemon
1 decade ago

a fraud money chain company of Kerala, PENTA WORLD, swindled lakhs of rupees in the name of E- commerce & discount cards.
Ankur Warikoo
1 decade ago
Strange that we have been facing the same situation at our end. Queries to money life have gone unanswered so far. Please get in touch at the email regarding an official response to your article. We wish to clarify all your doubts. Thanks
malq
Replied to Ankur Warikoo comment 1 decade ago
Ankur Warikoo, why not just place your "official response" here on the comments pages without demur? Some of us readers would LOVE to hear your version. Don't forget to place your registered address, contact details and other essentials like TIN no., sales Tax number, VAT registration, etc in the "official response" Humbly submitted / VM
Ankur Warikoo
Replied to malq comment 1 decade ago
Because there is a protocol when responding to the media. Had this been a customer blog, things were different. We are transparent in our conduct and wish to be given a chance to explain ourselves.
Sucheta Dalal
Replied to Ankur Warikoo comment 1 decade ago
Really strange... the email to you would have been sent by a specific journalist, why wouldn't you respond to him? As Malq says, why not post your response here. You have a grouse only if your full explanation is cut or curtailed. Have been in journalism 27 years, this protocol you talk about is news to me!!
still you can write to me at [email protected]
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