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In Asia, daily deals are a hit. But online coupons? Not so much


December.02.2014 0 Comments

coupons-scissorsI have been working in the online coupons space for quite some time now, and all of our business is in the United States because that’s the most profitable market. However, a few months ago I started researching dozens of other markets around the world, hoping to find another country for us to expand to. The data I found was interesting and insightful, but first, let me tell you a bit more about how the whole business works before getting into the numbers.

When somebody wants to buy products on a specific online store, they search for coupons on Google or other search engines. They find a website offering them, choose the promo code they like, and apply it on the checkout page at their desired shop.

Most e-commerce websites would be happy to convert at least one in 100 visitors into a paying customer. However, in the online coupons space, one percent would be considered a huge failure. Depending on the coupons, it’s possible to convert up to 40 percent of your visitors, meaning 40 visitors out of 100 actually buy something. That’s because the search traffic is so targeted – people already want to buy stuff before they even hit the search button.

So obviously the first thing I researched was the amount of searches specific stores get every month. I found that most people in Asia do not even know what coupons are. It’s funny that everybody uses daily deals in Indonesia (Groupon reportedly gets up to 10,000 transactions a day), but nobody knows what coupons are. Even though online coupons are not the same as daily deals, it’s still a wonderful way to save money.

Using Google Adwords, I took the main Indonesian coupon keywords and applied that to tens of different shops. These are the two that had the most searches (click to view full-size image):

Zalora:

Zalora Indonesia Searches

And Lazada:

Lazada Indonesia Searches

And that’s the same with pretty much all the Asian markets I looked at, such as Vietnam, Thailand, the Philippines, Malaysia, Hong Kong, Singapore, etc. All showed a low level of search traffic.

However, there is one that stood out – India. I don’t know why, but people do know what online coupons are there and it seems they are being used all the time. Here are the searches for some Indian online stores for the main keywords in the country:

Flipkart:

Flipkart India Searches

SnapDeal:

Snapdeal India Searches

The numbers are very different. What’s more, there are hundreds of other online stores in India that have thousands of searches and are worth pursuing, whereas I could hardly find one in Indonesia or other nearby markets. That’s the main reason why so many online coupon companies have already.

See: How Rocket Internet is Encouraging Coupon Clipping in India

So the takeaway is that if you wanted to run an online coupons website in most of Asian countries, you would have to educate the market, which is usually extremely expensive and time-consuming. On the other hand, e-commerce is growing bigger and bigger every year, and it’ll be a huge business in the future. So a company that manages to seize the Asian coupon markets will turn a huge profit five to 10 years from now. The only question is when should one enter the market so that they wouldn’t have to spend too many resources educating it, but still be early enough to seize a big chunk.