The crux of the Quora thread questions the benefits of social shopping for both consumers and merchants. With social shopping sites, consumers are now expecting bargains every day. From an economic perspective, the consumers become extremely price-sensitive, choosing to only purchase at heavily discounted prices.
Consequently, the merchants might lose out. Here’s why. While the “social shopping” model offers a low cost advertising and publicity channel for small-time merchants, there is a lack of brand loyalty among consumers (assuming everything else is constant). Consumers purchase the deal because the price is irresistibly cheap. Over the long run, even if consumers like your product or service, they might not want to pay the full price. Instead, they might demand that you do another run on the social shopping site, or they might purchase a similar deal from another merchant.
Some would then argue that providing discounts is a common business tactic that any retailer or business-owner can offer. But discounts are clearly different. Retailers offer discounts to get rid of existing stock. Think of it as a basic economic principle: you decrease the price of the supply so as to increase demand. However, in social shopping, you create the demand first, without necessarily ensuring that there is enough supply. Retail outlets know their inventory count perfectly well, and can afford to slash prices based on this knowledge.
Singapore, like many other countries, has caught up with the social shopping scene. According to an analysis by AllDealsAsia in October 2010, there are at least 15 “Groupon Clones” in Singapore.
The local media (both Mainstream and Tech Blogs) has positive coverage on “social shopping” in recent times, especially with:
1) Beeconomic’s acquisition by Groupon.
2) Telco Giant SingTel’s launch of a Daily Deals site on its inSing portal.
Doing A Deal Audit
With so many social shopping sites in Singapore, what kind of deals are the sites offering? Who buys them? How much savings do they offer?
For my mini-analysis, I compiled data based on the “deal of the day” (on 31 Dec 2010) offered by each of the social shopping sites. The sample of social shopping sites is based on SGEntrepeneurs’ article (which in turn, is based on the AllDealsAsia article). Initially, I wanted to analyze the daily deals over a period of one week or one month. However, some of the sites do not have an archive. Hence, I made do with a day’s worth of deals.
Findings
From the sample, 12 out of 17 (70%) sites showed at least one active daily deal. Out of the remaining five, two needed user account log-in (lazy users like me might choose to give it a miss), one did not have any deal of the day, one site only offers deals in Hong Kong and the fifth one is an inactive website.
For the 12 sites, there were a total of 14 active daily deals (note that all the sites offered one active daily coupon on their main page, except for inSing, which offered three).
Overview of deals on 31 Dec 2010:
Click for enlarged version.
Breakdown by Categories (Most Popular to Least Popular):
Deal On?
8 out of 14 deals had enough buyers for the deal to go through. There were no indication of the deal’s status for the three deals on inSing. The remaining three deals needed more buyers (ranging from requiring 1 more buyer to 50 more buyers).
Savings
Beauty coupons offered most savings – range between 50% and 94% savings. The average savings is 82.5%.
Facial, Massage & Body Wrap deals offered above average savings, at 88% to 94%. Brazilian Waxing & Spa were at 50% and 77% savings respectively.
F&B savings ranged between 50% and 63%. Note that the three restaurant deals all offered savings of 50%.
Sales
With such huge savings, beauty-related deals attracted a total of 425 buyers (note that three out of the six beauty-related deals were ending in three hours, while the remaining three will be for sale for at least 50 more hours). The four F&B-related deals only attracted a total of 69 buyers.
Interestingly, the least and most popular (sub-)categories came from the recreational activities-related deals where the “Segway” deal had the most buyers (423 coupons), while the luxury coach ticket did not attract any buyers.
Delving Into Verticals
Beauty: Beauty-related deals are extremely popular
Why?
1) Probably regarded as undifferentiated products.
2) Cheap –> Impulse buys! i.e. Facial & Massage at $10, $20, and $30 vs. $100 or $200
A person who comes across the deal might react this way: “Wow! What a steal! Too cheap – even if it’s not a brand I heard of/I trust, I’m willing to give it a try. And even if I don’t redeem the coupon (maybe because I will forget about it or don’t have the time), this is a deal that cannot be missed.”
Conclusion: Immediate gratification of cheap purchase > Worry about actual experience.
Interesting Point: As beauty-related coupons are really popular, can we conclude that most of the social shoppers are females?
F&B: F&B deals are not as popular as I expected.
Why?
Dining is a social experience. People choose dining options based on prior experience (food they like or brand names they trust), or based on the recommendations of people they know. The three restaurants featured may not be part of popular restaurant chains commonly known among Singaporeans.
Conclusion: Popularity of establishment and proximity are important in Dining Experience.
Recreation: The “Segway” deal at Sentosa is popular.
Why?
A huge proportion of the Segway deal is probably purchased in bulk for corporate events, family or friend outings as you probably will not try the Segway alone. Instead, you will more likely try the Segway as a social activity in a group context. So, you buy more than one coupon. Maybe you buy 2 or 5 or 10.
Also, customers have pre-existing expectations/idea on what is riding on a Segway like – through prior experience, photographs they see, friends who tell them about it. That makes it easier to jump onto a Segway deal.
Note that at least one other site has featured a similar deal by a different merchant before. The all-inclusive trip to Penang and luxury coach ticket are not attracting (more than 1) buyers.
Why?
Singaporeans (okay, everyone) are dead serious when it comes to planning for holidays, and do not make impromptu purchases (unless it’s for a super dirt cheap air ticket, which is extremely time-sensitive).
What’s up ahead?
Is social shopping the future of online shopping in Singapore? Or is it just a fad?
What do the social shopping sites need to do to make sure that they don’t die off? As the first step, I speculate that social shopping sites, in their bid to compete and differentiate from other local competitors, will once again learn and apply successful tactics executed by more established daily deals or e-commerce sites.
Perhaps some of the developments that we will see in the near future might include:
- A site for people to sell, trade or auction unwanted coupons in Singapore. This will add another layer to the social shopping ecosystem, and is already happening in the United States.
- Coupons offering enrichment classes (swimming lessons, holiday art classes etc.) for children, especially those conducted by independent instructors who would like to tap the demand in the local education sector, or coupons promoting local fashion/handicraft designers.
- Reverse auction feature on daily deals sites (eg. Name Your Own Price ala Priceline).
While this mini-analysis is based on a one-day sample, it forms a good starting point in obtaining more insights in the much-talked-about Singapore social shopping scene. When the social shopping scene develops to a critical mass, we can better understand purchasing behavior, consumer demographics and if the daily deals are consumer-driven or merchant-driven.
Image credit: epSos.de
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