The Gray Hair Speaketh

Advice that is largely Unsolicited.. – Best Deals for Group Purchases!

I was pleasantly surprised when @sampad shared the link of one day, and I went and checked it out. The concept was so close to my heart that I loved it at first sight. The concept. The site, I still had to go over and see! So this concept that I have loved for long, and which finally sees the day in the form of, made me come out of Gray Hair Wisdom Hibernation, and restart my startup reviews.

Category: B2C -> E-commerce -> Group Buying / Reverse Auction

What is it? is an online business that offers great deals, provided large number of people are willing to pick up the deal. In short, it is a group buying concept, and in some ways, a reverse auction also, since more the buyers, the better the deal that can potentially get generated!

What more?

The site does not expect to deliver any products to you. In that sense, there is a “local” factor to it. At this time, has deals to offer, for major Indian cities.  The concept is that many individuals who do not know each other, may be considering making the same purchase around the same time. If they could somehow be got together, and they position themselves as a “group” to the seller, this group now has a buying power to negotiate best deals from the seller. Likewise, if this disparate group of buyers, individually, could have walked into different outlets to make their independent purchases. Now if some dealer offers the best prices, and all those footfalls are diverted to that one dealer, he in turn, is grabbing the market from the other dealers, who did not offer that great deal.

This in a gist, is what enables.

My Quick Two Cents:

I am totally prejudiced to this business idea. In favor of the business concept, per se. So some of that will show in my thoughts here 🙂

Wanamo works for many reasons:

  1. It brings together people who want to buy the same thing, but did not know each other. And the group translates to discounts!
  2. The supplier of the product is transparent. The buyer knows what he is buying, from whom (traditional supplier) is he getting.  Buyers get the vouchers directly of the brand / supplier.
  3. Products do not need to be shipped. Takes away the issues of shipping, handling, octroi etc. The costs and the pain! Once deal happens, the buyer prints the voucher, and goes and picks up the product / service from the supplier directly.
  4. Everyone loves a deal. And deal is what everyone gets. For a simple reason that it’s a quantity purchase each time, and which assures a deal!

All of these reasons are from the point of view of the business model. Then coming to the actual implementation and execution, it looks good, mostly. The concept is not easy to explain. This is the clear make-or-break. I think Wanamo does a reasonably good job of getting the message across. Also the implementation has been kept quite simple and straightforward, and that can play a huge role in the ultimate success.

And now for some Wisdom Nuggets:

There are things that can hasten the path to success.

  1. The screen, as you can see from the home page snapshot above, is crowded. If the aim is to reach a highly mature Internet user, who can understand the various links and blocks all over the screen, then its fine. However, I suspect, to drive numbers, Wanamo will need to reach a slightly lower common multiple of the user base, and that user may just find the screen too busy.
  2. Speaking of screen design, it is a fine balance between temptation (to put everything there) and restraint (to put nothing but the very necessary items there). In the day and age of Facebook, Twitter, etc., there are the Facebook Fan boxes, Twitter widgets, besides the feedback link, the subscribe to newsletter link, etc. that seem like good things to have on the screen. Ultimately these will impact transactions. If its your blog, Sampad, you can get away with it. It is not a transaction engine. Where you want people to transact, to remove their wallet and put in the advance payments, there, you want nothing to distract and turn them away. Least of all, a crowded screen. So think about it.
  3. The one-deal on the home page may be a good way to start, and may also be what is logistically possible to be achieved. But with one deal a day, it will be very very tough to scale. Users have very low attention spans, and very low patience. And very little time. If I get a link of, and I reach the site. I see a deal. And that is all I see. And I am not interested in that one. Then, thats it. To get me to visit again, out of curiosity, is difficult. Unless there is a lot of money spent, and I keep seeing and reading Wanamo everywhere, there is a tough chance that I will go back on my own. Since I just have too many other things to do in life! Offering many deals across multiple products and categories is a way to interest more number of people.
  4. Finally, this is a great B2C e-commerce model. But the only way it will succeed, and succeed really really well, is if it gets scale. If there is even the slightest of satisfaction or relaxation perceived, with a few hundred participants or transactions, that is doomsday. One only needs to look at Ebay or Amazon, and see what kind of engines have been set up. In fact, Ebay should be the model to ape. And what is it about Ebay that should be aped? That you put up a great engine, keep investing in software and features, but then let vendors and customers go out there and help themselves. And you count the pennies that they keep leaving behind. And since these will be pennies that are left behind, you need a lot of transactions for these to count up to a lot of dollars. THAT is the only serious way to make this a business of massive proportion. If there is a large manual component in the transactions, or in pushing each vendor or customer, then I am afraid, it will grossly under-deliver to its potential. I mean, the founders will move from a small to a mid-size car or even a big car, but if they can set up their own VC fund in a few years or not, depends on whether Wanamo can look to be the Ebay of group buying-reverse auction, and churn out millions of transactions, or not!

All in all, a great business model. One of the best e-commerce plays that I have seen in recent days, and if all goes well, this is the one that we will hear a LOT about. Knowing what I do about at least one of the founders, Sampad, I know that he has huge determination and an excellent sense of the medium, and he  and his team just need to stay on track, and deliver this well. Wishing them the very best!!

GRAY SCALE RATING: 4.0 / 5.0 (only because its early days and it can go up, as we see good execution too!)

ADDENDUM: By coincidence, noticed this Tech Crunch article just the same day that I wrote this review of And it is quite disturbing. I await the founders’ clarification, since Abhishek had already commented here. Where lies the mystery? If Wanamo is a copy-paste copy of Groupon, then its bad. If there is a legitimate tie up, same needs to be mentioned clearly!!

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April 4, 2010 Posted by | Uncategorized | , | 12 Comments