There’s a lot of VC interest in this space, and that has largely to do with the success of groupon globally; they want to put money behind a working model. If you look at it from an India perspective, it’s a model that is very well suited – there is value for merchants and buyers, and a great marketing platform for services segment in the SME space. Finally, this is performance based marketing, and the Internet consumer in India is a deal seeker.
...The bad news is that this model has very low entry barriers. The good news is that it’s a model that is hard to scale
...GroupOn works on around 50% margins, and 30-40% margins is what this market might settle at.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at email@example.com