Hunger drives new group buying site, Spungry

SINGAPORE — Group-buying websites offer heavy discounts on services and products based on the condition that enough buyers want the deal.

The most notable of them is Groupon, the American company that offers daily deals on things to do, see, eat and buy in 48 countries.

Its Singapore chapter started in December 2010, following the acquisition of the local Beeconomic deals site.

Groupon Singapore CEO Karl Chong said that close to 75 group-buying sites have launched in Singapore since and, citing deals analytic company All Deals Leak’s (ADL) Q1 report for 2013, the industry generated S$129.6 million in total sales last year.

But the industry has taken a hit since its heyday. ADL co-founder and CEO Jason Lee said that the number of sites has dwindled to 12 notable ones, including Groupon, Deal, All Deals Asia, Bigdeal and Streetdeal.

Yet this has not stopped new players from entering the market. Gold 90.5FM deejay Joe Augustin believes he has hit on a group-buying idea that will revolutionise the market.

Launching its consumer marketing campaign tomorrow, Mr Augustin’s Spungry.com site will offer users discounts at restaurants for a payment of only S$1. There is no minimum number of buyers and merchants get cash from customers when they visit the shops.

For example, XX restaurant offers 30 per cent off its S$30 set lunch. The customer pays Spungry S$1 for the deal and pays the establishment the balance of S$20. This eliminates the cash flow problems faced by merchants when waiting for payment from deal sites, said Mr Augustin.

“In my personal experience moving some products off one of the other local deal sites, it took us months to get our monies from them,” said Mr Augustin. “This addresses that problem.”

Groupon’s Mr Chong said: “While I cannot disclose specific details of the individual contracts we have with our merchant partners, I can tell you that we take prompt payments extremely seriously and strive to pay all of our merchants in a timely manner and in accordance with the terms of their contract with us.”

Commenting on Groupon’s business model, Mr Claus Mortensen, Principal Analyst, Emerging Technology, Digital Marketplace for IDC Asia-Pacific, said: “Vendors have been very unhappy with the payout they had to give Groupon for goods and services sold via its service (initially 50 per cent of the discount offered). Sales via Groupon also do not create customer loyalty as consumers tend to go for good offers and discounts for products they’re already on the lookout for.”

Mr Daniel Latev, Global Retailing Manager for market research company Euromonitor, agreed: “Deal sites such as Groupon have passed their high days. It was really well received by consumers initially, but with the proliferation of deals and different sites, the novelty of it started to wear off. Overall, some of the deals would look good, but there would not be such a big saving if you shop around for these products, or consumers might not want all of the added features of the promoted product.

“For these daily deal coupon sites to be successful, they should profile their users much better. When they know what subscribers are interested in, it would generate far better results than simply throwing it out to everyone.”

Mr Augustin added: “I agree the old model of group buying is doomed. That’s why we’ve innovated a merchant-friendly approach to distribution that radically changes the game. We’d like to think of ourselves as the iTunes of the F&B world, but with more calories and a money-back guarantee.”