Archive for February 2011

Thoughts on group buying sites

Congratulations to Khailee for getting GroupsMore sold to Groupon (in a record five months since its inception!). He tells me they’re now Groupon Malaysia and Joel (his partner, co-founder of YouthSays) is going to be CEO of Groupon Malaysia. A lot of people instantly said that since Groupon is now in Malaysia, all the other deal sites can go the way of the dodo.

I don’t think so. For a site that does group purchases to be successful, people need to know it exists. Savvy Malaysians have always been into group purchases because a) our currency generally sucks, b) its difficult to get cool stuff shipped to Malaysia. Of course the currency is improving now, and there are virtual postboxes that ship stuff to Malaysia for a small fee.

But I digress. Group purchasing has been happening for years, heck over a decade. I remember when PDAs (Personal Digital Assistant’s, in case you’ve forgotten) were starting to become cool, there were many forums for PDA owners to hang out at. PDAs require accessories and since it was not mainstream yet, the best place to buy accessories was on the forums with other forum members. Someone would collect the money and negotiate to get a deal done to bring in the items for cheap. Most of these forums probably don’t exist any longer, but the LowYat.Net forums are still kicking. I’ve seen this applied to other niches like photography as well; and I’m probably missing out a whole bunch of other industries where people gather together on a forum and choose to grab something at a better value.

This is why I’ve generally not been too excited by group buying sites. I see it as an old idea being rehashed, except this time the target is the masses. For a group buying site to be successful, I think a few rules hold true:

  1. you need to successfully get the word out to buyers
  2. you need excellent (convincing) copywriting
  3. you need to find good deals that your audience will want to purchase

Am I missing some rules?

Now to address some of the rules. How do you gain critical mass and get the word out to buyers? I focus on buyers because you may have a community, but if your community is only focused on making money rather than spending money, you’re not reaching the right audience. Depending on your target market, you will have to look at ads in the newspapers, radio, television, Google Ads, Facebook ads, and so on.

Malaysia is a melting pot. People generally don’t speak the same language, though English and Bahasa Malaysia are widely spoken. Copywriting needs to be spot on. If you target only the English-speaking audience, it will affect where you target buyers and it also affects the deals the audience are after. No point having great copy (in English), putting up ads in The Edge Daily, and having deals on products from Zaitun, right?

Audience, target and language all play a role for a successful general group buying site. We have to celebrate our diversity. In other words, there’s market for plenty of group buying sites. Do you think forum group buying will disappear? I don’t.

If you happen to run a group buying site, think of your niche and pivot. Why for example, have we not seen people focused on getting good daily (or weekly like GroupsMore does) deals on fashion items? Would a site that said “first 50 people to buy this model Coach handbag gets it at RM1,800 and the deal takes place, and if the number breaches 51, the bag becomes a mere RM1,500 for everyone” be successful? I think it will, if you’ve got the correct target market (people that buy luxury goods very rarely want to pay full price for them — if you’ve worked for your money, you’ll want to save ever penny).

We’ve just seen that in the UK, Facebook has launched Deals. From a cursory inspection, this looks like a cross between Foursquare and Groupon, i.e. it finally makes using a location based service useful. Not that its impossible to do with Foursquare — they sell custom badges to corporations. What I think Facebook will do is decentralise it, just like they currently have done with their ads — let anyone run one. Google Offers will work for anyone that has a Places page — you create a Places page (helping make a better location database, quite unlike Foursquare’s) and you give an offer to people (no check-in’s required). Very decentralised.

Tie group buying dynamics with social shopping aspects, provide useful bargains, and you may just have a very profitable business, that also helps spur the economy!

Thoughts on Foursquare

I have now been a Foursquare user for over a year, basically since they opened it up for international users earlier last year. Here are some quick thoughts on the service.

To the uninitiated, Foursquare is a location based service that allows you to “check-in” to a place, so your friends can know where you are. Every-time you check-in to a place, you are awarded points (if it is your first check-in, you’re +5, for example). If you meet certain check-in criteria, you may also get a badge (for example, if you check-in, shout a message like “happy halloween”, you get a new badge). It also allows you to inform your friends on Twitter and Facebook, though this option is turned off by default (it can get pretty noisy otherwise). It is ideally used through an app, and they have them for the iPhone, Android, BlackBerry and many more platforms. If you’re on a phone that lacks an app, never fear, as they have a mobile site available for checking in (but not earning mayorship — fake check-in’s exist, even though there’s generally nothing to be gained from it).

Its nice to become a mayor of a place. Its also rather nice to get a new badge. These things work really well for Foursquare. There’s an element of game mechanics throughout the application. For example, if you are at an event with over 50 people, you’ll get a swarm badge. Or if you are a coffee snob, there’s a badge for that too.

Some smarter establishments are giving the mayors of the location a special or a deal for loyalty. Some say if you check-in after five times, you get a free cup of coffee. Its all geolocation based, so if I check-in at a Muji, I might see a special nearby at a Topshop which may entice me to pay it a visit.

Naturally, this has led to spammers showing up. I’ve seen job adverts, private banking adverts and lots more, all of which, generally get annoying.

The game mechanics behind a check-in is such that you are given points for discovering a new venue, checking into a venue for the first time, and how many times you’ve checked in all day. The problem with giving points for creating a new venue (discovering it) is that you tend to get people creating duplicate venues all the time. To be fair, sometimes the database is down so people do end up having to create a new venue, but most of the time its done to game the system.

Why? There’s a leaderboard. It shows where you stand amongst your friends, and where you stand in your city of choice. It gets reset weekly. It seems nothing more than a temporary high, but the problem of dirty data is amazingly bad. I’ve seen dirty data in Kuala Lumpur, Singapore, Bangkok, Delhi, Ho Chi Minh City, Istanbul, Bangalore and more. There are “data cleansers”, also known as Super User Level 2’s. Level 1’s can propose merge requests. In KL, there’s a movement called #4sqKLCleanup just to curate the dirty user generated content.

After a year of checking-in, I’ve asked myself what exactly is it I still like about Foursquare that makes me check-in?

  1. I occasionally bump into people that I’d like to see if we happen to be at the same mall or location. This has happened twice in a period of twelve months.
  2. I like reading the tips and todo’s left by users, especially if they’re my friends (because I then put more trust in what they’re telling me). If people say things that are generally negative about a place, I’ll probably not visit it. Businesses beware.

The badges and the mayorships mean nothing to me. I think deals might make sense, but there are so few of these in Asia, its almost negligible to even mention. I have yet to cash in on a Foursquare multi-check-in deal.

Third-party tools are making Foursquare (and other location-based check-in services) more useful. For example, I’ve seen DontEat.at which gives you a text message whenever you check into a NYC restaurant that is at risk of being closed down for health code violations. I’d love to know if the place I’m about to eat at is at risk of giving me diarrhea. I wish this was available everywhere, but I presume there’s an open data issue here.

I enjoy using Topguest. I travel a bit, and when you check-in at one of their partner locations (be it hotels, airport lounges and so on) you’re given like 50 points for a check-in. While 50 points in my mileage accrual probably means nothing, I do know that after 20 check-in’s at the ICH Group, I get 1,000 points from Topguest, which has a dollar value of about USD$13.50 or so.

People need to find a reason to check-in, and I’ve got basically three – bumping into folk, reading tips, and using Topguest. Are there other uses for a location based service? My friend Bernard Leong started up Chalkboard which aims to answer this dilemma, in where they provide deals based on location. It’s currently very Singapore-centric, and it is getting more use in Malaysia. Chalkboard helps me save money, and who doesn’t want that? They are currently growing though — I believe they just passed their ten-millionth ad impression.

I once thought that Foursquare could replace loyalty cards. The service however is not reliable enough, and fake-check-in’s are not good business.

Where will Foursquare go? It has competition from Facebook Places (not rolled out everywhere yet). I’ve never used Gowalla. In Malaysia, we’re starting to see the coming of Wootfood, which is checking in food items as opposed to just a place (Malaysians love to eat — exploit a niche!). Yelp has basically decided to ignore this market (notice how I usually only care about the tips, from friends?). Google has Places, Latitude and Maps which I think could be useful if Google understood social a little better and tied it together.

I guess the most important thing about Foursquare is its data. Is it big after a year of being available outside of the US? Let’s just say that after two to three check-in’s, I’ve become mayors of places that are in locations that I do not live at! I sincerely hope the focus is more on creating useful tips (give points for that, allow people to vote), rather than just simply checking in or adding locations that already exist in the database.


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