The group-buying ‘coupon’ industry in Singapore has seen several closures in the past two years. 

Three out of four companies trying to crack into the daily deals market have shut down in the past two years, with the latest being Outlet.com.sg, leaving only 19 companies competing for a slice of the market in Singapore. Of the companies that have closed, 84 per cent  lasted less than 12 months, an indication of the intense competition in the sector.

Companies in the group-buying industry that are looking for success must place emphasis on quality, service and trust, says Groupon Singapore, the leading survivor.

“Running a group-buying site requires a lot more than simply putting out great offers. In addition to goods and services being of reliable quality, companies need to provide great customer service and build trust with both customers and merchants,” said Karl Chong, CEO, Groupon Singapore.

Chong noted that other group buying sites struggle to acquire and retain customers and merchants if they do not ensure quality, service and trust. Later entrants to the market often underestimate the amount of resources needed to run the business in order to develop critical mass to sustain their business model.

Although the industry is at a stage of maturation with further consolidation and closures expected, Groupon says it is continuously innovating and demonstrating how viable the group-buying business is.

“Singapore has an ecommerce market size that was worth an estimated S$1.1 billion (US$897.4 million) in 2010 and is forecasted to hit S$4.4 billion (US$3.5 billion) in 2015. There is a huge potential for the industry and we fully intend to be a part of this growth,” said Chong.

He said Groupon was the first group buying site to introduce retail goods as a dedicated channel, through its Groupon Goods, and the first to have a physical shop via the Groupon Shop.

“It is imperative for companies in the group-buying space to continuously rethink and review at their business models to address the changing needs of both merchants and consumers. Groupon strives to continually innovate in order to achieve continued growth,” he said.

Groupon conducts monthly merchant and customer surveys to ensure it understands the changing customer landscape and evolves the business to suit.

Groupon’s latest Consumer Satisfaction Report indicated that the key areas that customers were most satisfied included the ease of redemption (93 per cent), the variety of deals (92 per cent) and the value of the deals (91 per cent). Overall customer satisfaction with Groupon was at 88 per cent.

The merchant survey found that the top three reasons merchants enjoyed working with Groupon were its ability to reach out to new customers (82 per cent), Groupon’s reputation (45 per cent) and its sizeable subscriber base (45 per cent). The score on reputation indicates the importance of trust when working with a daily deal site.

“The level of trust we have with our customers and merchants is the result of constantly putting their needs first, regular surveys, ensuring quality products and service and the ability to innovate,” said Adrian Tan, COO, Groupon Singapore.

Previously known as Beeconomic, Groupon Singapore was acquired by the global Groupon operation in December 2010. It features daily deals on things to eat, do, see and buy, with discounts of up to 50-90 per cent off retail prices. 

GB