From The Economic Times
Jasper Infotech buys Grabbon
Move Signals Growing M&A Interest In Business Of Providing Online Discounted Deals To Consumers
Sarah Jacob BANGALORE
DELHI-based marketing solutions company Jasper Infotech has acquired a Bangalore based group buying firm, Grabbon, signalling growing M&A interest in the business of providing online discounted deals to consumers.
Senior Jasper executives told ETthat the company purchased Grabbon last week in a cash-cum-equity transaction. Financial terms were not disclosed. Group buying is an online retail service that aggregates demand from consumers to negotiate unbeatable discounts from merchants across restaurants, spas and other entertainment avenues. Last month, Group Buying Global, and Harish Bahl, the founder of internet solutions company Smile Group, acquired Mumbai-based WanaMo.com. The daily deal site was rebranded as Deals and You in order to integrate it with the German firm’s lifestyle product portal Fashion and You, which targets the same consumer.
“There are around 10 group buying firms in India and the segment is gaining momentum because it can be easily monetised by the power of social media. Group SMS service providers may also enter this segment by linking together advertising with deals from merchants,” said Arvin Babu, partner with Greylock Partners. Unlike pure play e-retail which has failed to deliver across the 50-million internet user base in India yet, group buying is a low capital expenditure business. Its resultant high margins coupled with the consumer draw created by substantial value offering has led to a mushrooming of firms in the past nine months. Venture capital’s interest in the sector is also aiding growth. Greylock and Battery Ventures have committed $8.75 million to another Bangalore-based site Taggle.com, in tranches. The founders of private equity firm CX partners have also angel funded Delhibased Mydala.com.
While merchants gain by optimising capacity at his outlet and leveraging the branding on social media, the group buying firm picks up a marketing fee of around 20%-25% on each transaction. Many players now intend to extend this model into mobile phones to tap into a bigger base of impulse purchases. Part of the sector’s attraction lies in the nature of the business. “There are very few transaction-based businesses online where monetisation is directly through revenue and not just advertising,” Mr Babu added. Jasper, which uses its relationships with 15,000 merchants through its other businesses to offer discounts through Snapdeal, sees potential in developing a network of group buying firms. Founded by Kunal Bahl and Rahul Bansal, Jasper is the holding company of group buying arm Snap Deal and Moneysaver which offers co-branded discount cards and coupons on mobile.
In Grabbon, Bahl said he saw a brand that had geographical strength in Bangalore and was built by a team founded by XLRI graduates Tony Navin, Jackson Fernandes and Balamurgan Balasubramanian. The founders will continue to manage the company. Jasper intends to expand to Singapore by August and is exploring inorganic options across markets such as Thailand, Indonesia, Malaysia and Philippines. “It’s a buyers market internationally as most players are at the same stage of growth. The team becomes the clincher,” said Kunal Bahl. Group buying is also seeing some M&A activity in western markets where it is very well developed. Pioneer and the world’s largest group buying site Groupon, reportedly valued at $1.35 billion, entered the European market by snapping up German competitor Citydeal in May.