Group Buying Deals in Malaysia

My apology for not updating the blog for some time, my current project takes up my time than I liked.

For the past 3 months, I've observed the rise of Group Buying deal in Malaysia and it is quite amazing, I believe by now there are at least more than 100-200 companies with similar concepts. Here are several I've encountered and know of so far:

  • Everyday, that was recently acquired by Korean based Ticket Monster is probably one of the early adopters of Groupon model and has been really successful in the market with strong database.
  • Groupon, originally called GroupsMore was acquired by Groupon and ranks number 2 probably.
  • Others like JigoCity, CouponHouz.com (collects zero commission from merchant, instead collects from members), WeBuy.com.my, Deal4Real.Asia, MyDeal.com.my, etc.

I have also noticed a lot of other sites that would always display "wait until new deals are announced", this translate into they have not secured a strong merchant database or merchant are just simply refusing to cooperate with them. You'll notice a lot of sites in Malaysia will have this.

I do have concerns on the competitive edge and also the limited amount of merchant in the market that are constantly being lured to do deals with these companies. Their profit margin must take a deep whenever they do this, especially for the smaller business owners. I've observed that the average group buying deals that can be reached per deal is between 500-3000 which is relatively small for a country this size and pretty decent Internet penetration. Then comes the customer quality with it, are they just looking for cheap price and huge discount or are they quality is something that can be argued from both side of the fence. Malaysia is also a very price sensitive market, if you look at Hong Kong the average group buying deal price there is anything but cheap, which what I believe is good for both sides - group buying deal company collects more money, merchant pricing is not compromised and also doesn't have to dance around the cost, at the same time the customers get a great value-for-money deal.

If you also noticed at the business sustainability, you should run between 3-5 deals per day. But the sites in Malaysia runs between 3-10 deals a day and the original concept was supposed to be 1 special deal per day, so you can see their business also needs a certain amount of deals to be bought for them to break-even I imagine from the ads they are spending, staffing and other operations.

Then we look at the commission percentages these company will take from the merchant, it varies between 20-50% based on the discounted price (thank god its not based on the original price). But this still means a lot of money for both side, by the way this commission is a lot more than what I have encountered in China which is a lot lower (of course China has the buying power and also the numbers).

My advise before you "make a deal with them" is to look at your business model first, the size and your financial capability. As Group Buying Deals is not about profit at all, it is "trying" new customers (when I say trying as in really trying your hardest to at least attain 5-10% of the clientele, as remembering as it is a price that is sliced in half it of course impact the client quality at the same time, not that all is on the discount hunter side, but you get some of them). Smaller business do need to 三思而行 before deciding anything as your Profit & Loss is very sensitive, especially in Malaysia market.

Remembering these are the rule when you go into group buying deal:

  • It has to be 50% otherwise there will be no buy, its not about profit but you can't loose money either. Look at your cost and slightly increase it just to be on the safe side.
  • Check what is the commission percentage the group buying company wants, this is where you loose a bit more money. Negotiate!
  • Predict what the sale will be and if you are in food/restaurant (which most of deal are), allocate your voucher consumption per day. As you need to balance out between current/old customer with Groupon customer.
  • Think of a program and a campaign under-layering it to try and capture and convert them into your business ends in the long run.
  • Capture database, mobile, email or even get them to like your Facebook is just some I would run side-by-side the group buying deal.
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China Online Video Landscape

Tudou currently receives a massive 200 million to 220 million unique visitors a month — about double search engine Baidu. The company is planning to divert its business towards more legitimate, meaning less pirated, more verification and screening of content. It is also migrating the operations models from web to mobile as well.

China is already the largest Internet users and is planning to install more broadband and increase network coverage throughout the country. The stats from print media to online is just exploding bigger and bigger - 450 million Web users, 800 million cell-phones users, and roughly 370 million TV households.  The key is grabbing the next move on network capture - mobile users, with more technology and better software coming into the market like iPhone and Android it will definitely change the media landscape again.

Read MarketWatch detailed report here.

Dianping Location Checkin

Dianping http://www.dianping.com, China largest restaurant and bar review website has just recently renewed their iPhone app. The new app utilize more on map, GPRS location, the ability to add reviews and post photo, as well as location base check-in. Looks like this type of SNS is seeing a growth of mobile users, especially with Dianping with their existing users presence in China.

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China Social Media: Youku video analysis

Just noticed that there are some videos on YouKu now carries a small symbol of analytics, upon clicking you can see the preview here and still carries the Beta symbol.

It tracks:

  • The keywords search volume and trending.
  • Play counts.
  • Related keywords search.
  • Analysis of like, comments and favorite per playlist.
  • Demographic analysis of age, occupation, education and gender.
  • Geographic analysis of viewers.

This will assist marketer in tracking their videos impact in China, although Youku users has been reviewed as young and low spending, but still presents a big market.

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Social Media: Have read the news lately

For the past week I've been amazed by the volume the newspaper has on social media or trends, at least there is one news per day.

The following are several that i found quite interesting:
- The growth of Online PR and Online shopping in China, the value grows year by year as marketer, brands and products looks for way to create that connection with the people.
- Read 'em and Beep - talks about how today's communications ironically allows us to talk even less. You'd probably heard the word more on "just text me, tweet me, or FB message me". It's probably faster to Facebook message someone today then text them.

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China Social Media: Top 10 SNS website

4. Kaixin001.com 
User Stats: 3.5 million

5. Myspace.cn
User Stats: 2 million

7. Wangyou.com
User Stats: 1 million

9. 360quan.com
User Stats: 900k

10. Cyworld.com.cn
User Stats: 800k

Typically the major player of SNS where they have large and broad base audience charge up to half  million CNY to setup a fan or business page (now this is only the fee for a year hosting, not including hiring a Social Media agency to setup the details).

International companies, FMCG, large brands can definitely benefit from these Social Networking Sites, as the sheer number, breakdown in age, demographic, by geography, etc is just a large base for them to pick from. Of course people wants to jump in to get a piece of the cake or action sort to speak, but new International comers will need to do adjustment to the market. Some companies didn't realize that engaging a campaign on these sites are not the only thing they need to do, a backbone team to engage back is required, monitoring, data analysis, plus their websites, language are probably not customized towards the market. Language in this region has always been a challenge to new International companies, as they tend to assume translation will do the magic (majority would engage translation.com) which most of the time 50-70% reach, but still a gap to deliver brand message to the market. In short, there is no shortcut, content must be grass-root and originated from this country for the Chinese market.

For example McDonald China once launched a campaign "Let's meet at M" to Ren Ren, I believe they set the goal to if 200k-300k of people updated their status to their campaign slogan. McD will provide 50% discount at all of their fast food restaurants in China. In less than a week, over half a million people in RenRen changed their status (imagine the spread power it carries through each person's network, the impression is a lot bigger) and of course not only uplift the brand buzz of McD, but also provide a customer experience of meeting at McDonald is trendy as part of their branding message and additional traffic to their restaurants. It tells us the power or WOM in China is huge and news travel a lot faster on Internet, remembering Chinese habits to read blog and engagement on BBS. Now imagine if they didn't understand how the youth market works, how they think or what can entice them, would the campaign work?

Marketing through Social Media in China is not a walk in the park, if companies don't appreciate the Chinese culture, their views, what they look at and how they look at, brand reputation can be affected.

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