Oct 13, 2012

Vietnam - Wrong business strategies deal strong blow on Groupon distributors themselves

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VietNamNet Bridge – Hundreds of Groupon websites mushroomed in the golden age, but a lot of the websites have shut down quietly, which shows the big problems of the model in Vietnam.

Groupon means sale-off channel?

Groupon has become more and more popular to Vietnamese, especially office workers, who are always next to computers and do not have much time to go shopping. Hundreds of websites were set up, offering the attractive discounts of 50-80 percent to lure more buyers.

There is a principle that many groupon websites followed that “raising the original price, lowering the quality and quantity and offering high discounts.” A lot of consumers imagined that they could buy good products at reasonable prices. However, in fact, there was no big gap between the prices consumers enjoy from groupon websites and the market prices.

However, consumers later found out that they were swindled, and that groupon is just a channel for distributors to sell low quality products. And they have said goodbye to the groupon websites. Especially, many of them have called on to say “no” to the e-commerce mode.

As a result, the deals which really have high quality have been ignored, while the businesses which plan to follow authentic business strategies still dare not join the market.

Even groupon websites’ administrators have realized that they have suffered from their wrong business strategies. Since they only tried to offer high discounts, they have created a new class of customers who only hunt for the sale-off products, i.e. the customers who only use services when they can enjoy discounts.

Of course, the customers do not intend to become loyal customers of the enterprises. Meanwhile, the enterprises have to work hard to serve the customers, while missing others who would be ready to pay full prices for their services.

Once enterprises lose their loyal clients, this means that they lose the prestige of the brands and the opportunities for sustainable development.

A breakthrough needed

Vietnam, with 31 percent of population accessing to Internet higher percentage of young consumers, is believed to be the ideal market for new investors to develop the groupon model.

However, a lot of groupon websites could not exist and had to leave the market, which should be a big lesson for others. Consumers keep chilly to groupon model because they doubt about the quality of products and the “virtual price discounts” offered by enterprises.

Analysts have noted they cannot see any noteworthy things which can differentiate ones from others and could serve as their competitive edges. The only groupon website which is different from others is dealdulich, simply because it focuses on selling tours in Vietnam.

To date, most of the groupon websites have been developing their business in the southern market, which is considered a commercial hub with dynamic consumers.

How to exploit the groupon mode so as to bring benefits to both clients and businesses is the question enterprises have to think about.

Analysts have pointed out that the most important thing that helps retain clients is not the low price of products, but the high quality. Therefore, in order to attract customers, groupon websites should strive for the principle “cutting expenses, maintaining quality,” instead of “raising the original price, lowering the quality and quantity and offering high discounts.”

The optimum purpose of groupong websites should be attracting loyal clients instead of hunting for short term clients.

Compiled by C. V

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