The general public has become extremely cautious with their money during the fierce financial crisis and has been seized upon as an opportunity by group shopping portals. They have been inspired by Groupon, the American group shopping portal and thus offer vouchers for the purchase of a wide range of products, at discounts of up to 50% and sometimes 90%. The items on offer vary considerably, but are mainly short journeys, beauty parlour services and wellness programmes, as well as a large number of restaurants.
In April “products” ranged from Kart racing, two nights accommodation with breakfast and an unlimited wellness programme, online English courses, bowling for six people, two nights accommodation with buffet breakfast, seven day sailing courses and tandem skydiving were amongst the top 10 generating the highest revenue.
Further investment required
According to a large number of “Groupon clones” that have appeared in Croatia during the past two years, this market niche has seen a remarkable boom. There were just 25 portals involved in group shopping during mid- 2011; currently that number has doubled. Many entrepreneurs have been attracted by the surprising number of online customers and the low initial investment needed to create a shopping portal.
Nevertheless, several shopping portals have ceased operating since it is not enough to start a functional shopping portal as a high level of funding is needed for the promotion of the portal product range, which needs to provide attractive prices and quality items continuously. In addition, high quality staff have a fundamental role of negotiating with service providers on the required number of attractive offers, where service providers need to inform the group shopping portal of their prices. Hence, additional investment is needed, as well as keeping up-to-date with some 50 fierce competitors on the market.
Kolektiva, the first group shopping portal in Croatia, started in January 2010 and is currently market leader, with a market share of 42% and with revenue of €0.5 million in April 2012.
It was founded by two enthusiasts, Jeffery Edward Treichel, an American from Chicago and Martina Usmiani, his Zagrebbased business partner, who decided to introduce the online group shopping business model. Consequently, Kolektiva was one of the first group shopping portals in Europe.
The initial concept was to extend operations throughout the region and branches were opened in five further countries – Slovenia, Serbia, Macedonia, Romania and Bulgaria. Kolektiva has been the largest regional company for group shopping since its inception. During the past two years, it has achieved high levels of voucher sales (in excess of 200,000) and it is planning to launch new projects before the summer.
“Irrespective of the fact that over 50 portals offering group discounts have been launched in Croatia during the past two years, online group shopping market has not been appropriately regulated to date, which can cause problems for both clients and users. Nevertheless, Kolektiva has been operating at the highest level of business ethics and fair play, which has been recognised and appreciated by users.
Its success is reflected by its remarkable business results”, pointed out Marina Đukanović, Director of Kolektiva. The fact that it was the first in Croatia has also contributed to its success. According to Marina Đukanović, the services provided by Kolektiva meet client needs, since clients themselves are also very well promoted towards their target market with ample purchasing power. The Director emphasised the company is planning to work harder on travel deals since 35,000 Croatians purchased holiday arrangements through Kolektiva last year.
Short journeys accounted for over 75,000 overnight stays, with more than half being in Croatia. Kolektiva invests a large amount in the online promotion of its product range. “The promotion of the quality products of our business partners is our most effective advertising”, stated the Director. Online group shopping market is very dynamic and has seen growth trending upwards irrespective of the current crisis, since total monthly turnover has exceeded €1.3 million for the
past two years and further growth is anticipated.
Marketing investment necessary
There are “aggregate portals” which bring together the full group shopping portal product range. There is also a portal called SveJeTu.hr, which uses codes from group shopping portal websites to collect data daily on turnover and thereby creates data on the overall group shopping market in Croatia. According to the latest data, average monthly revenue currently exceeds €1 million. 40,055 items were purchased through group shopping portals in April, the average discount being 59%, with the average price of purchased items being €27.
In terms of revenue (April figures) the following data gives an indication of the most popular sites: Kolektiva (€0.46 million), KupiMe.hr (€0.17 million), Megapopust.hr (€130,000), Crnojaje.hr (€60,000), Povoljno. hr (€45,000), Ponudadana.hr (€37,300), Trebamto (€24,300) and Tidamtidam (€24,000). It is important to stress that Kolektiva communicates directly with clients via a newsletter and advertises its range on popular news portals. However, a large number of group shopping portals have seen stagnation. What is vital is for continuous investment into marketing.
Source: PVI International