As online shopping grows in India, deal sites that offer cash-back and discount coupons have emerged, helping retailers to add customers and widen the market. E-commerce entities such as Amazon have started to realise the importance of these deal sites and the impact they can have on business.
For large e-commerce players, partnering with discount coupon and cashback sites is a way to gain a larger market share and build competitive advantage, said Ravitej Yadalam, CEO and founder of Pennyful.in, a coupon and cash-back shopping website. For smaller companies, affiliate marketing, as the concept is known, is a way to garner brand recognition and a risk-free and cost-effective channel for customer acquisition and retention, according to Yadalam.
Anisha Singh, CEO and founder of mydala.com, a Delhi-based coupon provider, says it is a good time for the online discount marketing industry in India. According to her, "a report by Motilal Oswal has stated that the online coupon/discount marketing segment has flourished alongside the surge in e-commerce in both US and China."
There's no unanimity about the impact of deal sites and some say that they benefit mainly small and relatively new retailers.
Couponing websites are most useful for those retailers and service providers who are new, local, or too small to compete with large e-tailers in driving traffic to their websites, said Devangshu Dutta, chief executive officer at Third Eyesight, a consulting firm.
"In many cases, the benefiting merchants may not have any online presence at all, and the couponing site provides them a relatively low-cost, low-commitment model to create a presence online," said Dutta.
Amazon, the world's largest online retailer, has tested the concept - the company refers to affiliates as associates -- in the global market and has a different take.
"Associates are a great platform that we have had for 20 years and we continue to invest in them. When it comes to India, it is going to be one of our very important channels," said Samir Kumar, director of category management for Amazon India, acknowledging that deal sites are an efficient way to get traffic to its platform.
Flipkart, the other major e-commerce player in India, declined to respond to e-mailed questions.
CouponDunia, a discount coupon site, pushes over Rs 20 crore worth of sales to merchants every month, according to founder and CEO Sameer Parwani. With a monthly visitor rate of 4 million and an e-mail subscription base of 3.7 million consumers, it directs a substantial rate of traffic to partner websites, says Parwani.
Mydala, which claims to have sales of 200,000 vouchers every day, enables revenue to the tune of Rs 400 crore per month for their partners, according to a company official.
Another deal site, CashKaro.com, manages over 2,500 transactions a day and has credited over Rs 4 crore of cash back to members, according to Swati Bhargava, a co-founder. It has enabled partners to generate Rs 150 crore since the company started in April 2013.
Given the boom in online shopping, turnover at deal sites has grown rapidly.
"Our overall business has been EBITDA (earnings before interest, taxes, depreciation, and amortisation) positive and has clocked in 600% growth in sales in the last two years...we are looking at increasing our merchant base to a million merchants in 2015 and coupons sales to increase to 8 million per month in March 2015," according to Singh of mydala.
Yadalam of Pennyful.in says the company's revenue rose 2.5 times year-on-year as of 2014 and its customer base is increasing by 150%.
These coupon sites are adding 25-30% traffic and sales to the ecommerce revenue saying Mili Thakur from TheTradeBoss.com, an Online trade Magazine.
So it is ovious that the future of ecommerce is in safe hand and coupon sites are added advantage to this.