With the acquisition of Nearbuy and Little by Paytm in a distress sale, deal discovery segment is finally dead in India. The duo collectively raised over $67 million and reportedly got acquired in about $30 million. After the acquisition of two leading players in the segment, now it is only left with Info Edge-backed Mydala.
While India is known for discount and deal hunters, still Nearbuy and Little failed to attract enough users and keep afloat independently. In fact, both had been trying to raise fresh capital but investors were skeptical about their prospect.
So, why deal-centric portals crumbled despite raising capital from blue chip investors including Sequoia and Singapore’s GIC?
“The upside for deal discovery platforms is limited. Nearbuy and Little were failed to create a sticky proposition for consumers,” says Satish Meena, senior research analyst, Forrester India.
Currently, India has a little over 10 million unique customers, who transact online. Meena believes that only 10% of it roughly seek deals and offers across restaurants, entertainment, travel, body-art, gyms, spas, and salons regularly.
Until the beginning of this year, Nearbuy and Little were boasting of their growing numbers. However, such numbers look good on excel sheet not in real business metrics.
Last year, Nearbuy claimed to have 500 per cent growth in business along with about 3X growth in merchant base. The company also expanded its reach to about 40 cities. “While we continued to expand and onboard new merchants, we failed in a driving transaction for them,” adds one of the senior employees working with Nearbuy on condition of anonymity.
Now the moot question is, why they failed to entice customers and drive transactions for customers?
“At a fundamental level, they weren’t adding any value to customers. Both companies (Nearbuy and Little) started with backing from day one. They started on the back of funding not for solving any major pain of customers,” emphasizes K Vaitheeswaran, a veteran Internet entrepreneur, and author of ‘Failing to Succeed – the story of India’s first e-commerce company’.
Fundamentally, deal platforms in India weren’t aggregating what consumers search and crave for. According to Vaitheeswaran, this was the primary reason for their failure.
“Consumers need mouthwatering, outstanding and unique deals which they couldn’t access otherwise. However, it never happened. On the other hand, horizontal players like Amazon and Paytm covered such deals in a more meaningful way,” he adds.
Coupon companies saw their heydays during 2011-13 when e-commerce players substantially leveraged them to acquire customers. But soon, charm around them faded as e-commerce sites started offering promo codes directly.
Similarly, Nearbuy and Little failed to captivate customers and build a moat around their business models. Eventually, business models around deals and offers are dead in India now.