Group-buying sites in Malaysia gaining visibility

Businesses need to decide whether the 40 to 70 per cent margin that they are willing to discount via coupons and discount sites are really enhancing their brand image and attracting ideal clients, or just cheap prospects.

WHEN a local website advertised a deal for afternoon tea at a quaint English cottage up on Penang Hill last month, those familiar with the charming surroundings of David Brown's Restaurant and Tea Terraces, which is tucked away on Strawberry Hill, made a beeline for the discounted treat.

Malaysians living overseas who were planning to return home for Christmas bought the coupons online, since the deal offered was considerably less than what is normally the costs for a nice spread of scones, fruit cake, strawberries, pies and sandwiches.

Besides manicure and pedicure sessions being offered at nearly half their usual prices, establishments such as five-star hotels have been known to draw in the numbers by offering heavy discounts for buffet meals, which essentially end up being a buy-one-free-one deal.

Group buying, also known as collective buying, offers products and services at significantly reduced prices on the condition that a minimum number of buyers would make the purchase.

So far, there have been only a handful of well-established and high-end brands or services which have been represented via group-buying sites.

Malaysian group-buying sites have been gaining visibility in recent years and service providers like MilkADeal, Groupon Malaysia, MyDeal.com.my, Dealmates and Everyday Coupons are but a few who have been giving people a chance to get good discounts via online shopping.

Items ranging from meals in five-star establishments, tour packages, high-tech gizmos, beauty and wellness services are featured as a deal-of-the-day, with the deal kicking in once a set number of people agree to buy a product or service.

Buyers are then sent a voucher after they have made their payment and use this to claim their discount at the retailer.

For their part, the group-buying firms work by negotiating deals with local merchants and promising to deliver large numbers of traffic to their establishments, in exchange for discounts.

In Malaysia, a number of these firms have gone the extra mile in seeing that their reputation remains solid by ensuring that the merchants that they partner with offer satisfactory services.

Dissatisfied buyers who have sometimes found merchants giving them a hard time have either stepped in to iron out any ruffles or gone ahead and given customers a full refund.

There have also been instances when thorough checks have not been made on some participating merchants, and consumers suddenly find that these service providers may have been not entirely truthful about their credentials.

Group buying can be traced to China, where team buying or "tuangou" was carried out so that discount prices are obtained from a retailer, when a large group of people are willing to buy the same item.

While airline tickets, hotel bookings and purchases from established sites like Amazon.com and eBay have had a head-start for Malaysians when it comes to online shopping, the idea of buying from group- buying sites may need a little more time.

While some have gotten comfortable with paying for their goods and services over the Internet with the confidence that they are not being duped with counterfeit goods or shoddy services, there are still others who will need to be convinced that there is much more to the shopping experience than patronising bricks and mortar outlets.

As for Malaysian retailers and service providers who have jumped on the e-commerce bandwagon, it would be interesting to know if even pedigree companies, who turn to group-buying sites are actually offering discounts and good deals per se, or simply using these sites as another channel for advertising and branding.

With the frenzy now created by "daily deal" sites as consumers scoop up big bargains and service providers try and figure out if their discounts being offered really would make sense for their businesses, it would be interesting to note if normal and full-paying customers are going to balk at the idea that they have been overpaying.

Businesses need to decide whether the 40 to 70 per cent margin that they are willing to discount via coupons and discount sites are really enhancing their brand image and attracting ideal clients, or just cheap prospects.