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Bharath Devanathan, COO, Groupon India has played a key role in the success of Groupon in India. With over 12 years of extensive experience in technology, management and operations, Bharath was appointed COO at Groupon India in April 2011. He is primarily responsible for managing and growing the business of Groupon in India, as well as leading the company’s product development and technology strategy. During the past one year, he has also helped build and grow the business of the company in South India. Prior to joining Groupon India, Bharath spearheaded various partnerships in the satellite and broadcasting industry at Booz & Co and served as a Senior Software Engineer at Yahoo! where he was managing a large part of Yahoo Mail.
Groupon, launched in November 2008, features a daily deal on the best stuff to do, see, eat, and buy in 48 countries, and soon beyond. We have about 10,000 employees working across our Chicago headquarters, a growing office in Palo Alto, CA, local markets throughout North America and regional offices in Europe, Latin America, Asia and around the world.
Replying to Anil Mascarenhas of IIFL, Bharath Devanathan says, “Internet has played a silent but important role in giving a boost to India’s consumption story. We like to call ourselves a lifestyle discovery engine. We earn when our merchant has acquired a customer.”
Briefly explain to us your business model.
Groupon is a global leader in local commerce, making it easy for people around the world to search and discover great businesses at unbeatable prices. Groupon offers consumers incredible deals on the best stuff to eat, see, do, and buy in 48 countries. We like to call ourselves a lifestyle discovery engine. We earn when our merchant has acquired a customer.
What is the size of the deals segment in India? Comment on the merchant associations you have? Are they all only in India?
The daily deal websites comprise India’s fastest growing web vertical. Last report I saw on comscore the coupon business was 16.5% of the total e-commerce audience in India, growing at the rate of 629 per cent with 7.6 million unique users a month. This clearly shows that Indian consumers who were earlier apprehensive about shopping online are now browsing more often to make high value purchases and avail experiential offers.
We were a late entrant in the market and with the thought we entered was unique as we focus on our merchant associations. We look at their key problem areas and then give a business solution to them. We believe good merchants get you customers. We have a dedicated partner services team who works closely with the merchants on a day to day basis.
Currently we have association with some of the leading brands including Radisson, Hilton, Ginger Hotels, Claridges, AmodaSpabar, Crowne Plaza, Kainoosh, Olivea, World Cuisine, Uni Spa, Srinathji amongst others. In past one year we have worked with 5000 unique merchants.
What is the product profile of the company?
We have three major verticals – Local commerce, Travel and Goods. Local commerce is further divided into food and beverages, leisure, health and wellness. Under travel we have crazy deals on holidays.
In terms of keeping in touch with the times, what is your technology strategy? What extent of customization is being done for India?
Groupon is a unique technology company that leverages technology and local market knowledge to give customers a Great Deal Every Single Day. The great thing is that it works the same way across the globe from Chicago (where it all started) to Paris, Delhi or any of the 48 countries we are present in. One of the major reasons behind this is technology. We built one platform and replicated the same across 47 countries giving us a tremendous advantage while scaling operations to a global level. Beyond that we have centralized technology teams that help build one technology and leverage it across continents making it more agile and easy to deploy. We even have local teams that work on developing local enhancements and plug-ins that are unique to a market. One good example is that India is perhaps the only country in the Global Groupon Portfolio to have a COD (Cash on Delivery) option in the payment gateway. We had to tailor make it to leverage the huge demand in India for COD
Give us a geographical break-up of your revenues.
We are a publicly listed company and cannot share country specific numbers.
You’ve worked with Yahoo for a while. Share some learning?
Some things I have learnt here are:
Could you share some anecdotes at Yahoo?
At Yahoo Mail, traffic to the website is a direct indicator of the culture of a country. For e.g, you would know which countries celebrate Christmas (countries that do will have very low traffic on that day). In most countries, mail traffic is highest between 9-12 in the morning. In Japan, it is highest between 7-9 pm. Japanese don’t check personal mail during the day!
What are the customer service initiatives you have in place?
We like to start with customers and work backwards. One testament to the fact is that we have a 45% repeat in purchase rate. In terms of initiatives taken we have a customer service helpline and service lead agreements on Customer service issues to be resolves across telephone, email, social media. We also have a feedback mechanism where management directly answers customer queries.
Tell us about your financials. What is the outlook for the coming years?
We are a publicly listed company and cannot share country specific revenues. We entered the market just last year; but we have grown organically to reach the #1 rank in the daily deals category (as per ComScore data).
In the last few months, various internet deal sites have either shut shops or have been acquired or altered their business model as they found their original deal model unsustainable. The number of serious deal sites in India has now come down to four or five, from around 40 in 2010.
Some key milestones
What is the vision of the company?
Groupon’s vision is to be the world’s local commerce operating system, increasing consumer buying power while driving more business to merchants through price and discovery.
What are some of the opportunities and challenges you see in this business?
Internet has played a silent but important role in giving a boost to India’s consumption story. With the advent of 3G, telecommunications and high mobile penetration, e-tailing in India has intensified closing many gaps between urban and rural consumer’s tastes, preferences and consumption patterns. Currently 60 percent of our sales come from six metros with remaining 40 per cent from non-metros. We see this trend catching up fast as consumers increasingly aspire to purchase brands and lifestyle products like never before.
The main challenge we face today is that by facts an Indian customer buys books and gadgets online more than any other product. He may buy one book a month or a phone in six months. Most of us eat out at least once a week or may be more. The real challenge is making him buy meals online. That is a habitual change we are looking at. This helps us in getting the best merchants on board which gives an assurance to the service and a great experience drives repeat purchase. It is a vicious circle.
What are your capex plans and how would they be funded?
I can’t share the plans for the reasons mentioned earlier.
Comment on your employee strength. What kind of openings do you offer?
Groupon India’s current headcount is 236. Approximately 91 employees were added in the last fiscal (calendar year) and we plan to hire 40 more employees in next 3 quarters of this fiscal.
We have a stringent procedure – mainly ensuring that we hire only the right minded candidates to truly believe in our offering. Maybe that’s why we end up hiring only 5% of the candidates we meet.
What are some changes you would like to see in India which will aid the business?
Of course, internet and mobile penetration in India will help a great deal and aiding the business.
Your message to B-School students who may want to make a career in a company like yours?
Groupon is a web 3.0 company. We have been called as the world’s fastest growing company. If you want to work and succeed @ Groupon you need to start with customers and work backwards. You should be ready to roll up your sleeves and do every small task as we believe in small and lean structures.
Follow the Ten Commandments:
India Infoline Research Team / 14:59, May 20, 2015
GPIL reported 13.5% yoy decline in operating profit as the impact of higher volumes was offset by lower product prices