Most collective buying services did not survive in Ukraine

Photo: Eugeny Musienko

Over the last year the number of online collective buying services has decreased significantly in Ukraine. In the summer of 2013 experts spoke about 40 companies operating on this market. Now, there are less than 10 of them, they say. Many small players and some big companies had to withdraw from the market. For example, the Russian service Biglion left Ukraine. Meanwhile, the largest Pokupon and SuperDeal services merged.

Ill fame

“Two or three years ago customers and partners hardly saw the difference between the group buying websites, which sprung up like mushrooms after a spring rain,” says the head of the Russian project KupiKupon in Ukraine Akmal Rakhimov.

Based on the estimates of the head of the Ukrainian representative office of the Groupon international company Mykhailo Deyneha, at the peak of popularity of coupon sites there were approximately 50 of them in our country. Some of them simply copied each other’s offers, sold low-quality goods and services and thereby spoiled the image of the entire sector of collective discounts. Service providers still sometimes can be blamed for dismissive attitudes towards customers, who came to them with discounts.

“I think we managed to solve this problem and show a proper attitude towards our users,” says Deyneha.
Indeed, the image of coupon services leaves much to be desired, agrees the founder of Luckyprice Vlad Lishafai, adding that most of them charge a commission fee of 30 – 50% for their services and with such a margin one cannot put quality products on the shelf. “Therefore, in this way companies usually sell Chinese consumer goods or services,” he said.

New blood

Lishafai’s Luckyprice will be launched very soon and will charge a reduced commission fee (1%). Discounts will be sold through the website itself or through online resources of partner companies (manufacturers and suppliers), who will add a special application to their websites. The size of discounts will change every time you click on a price.
In addition to attracting clients, Luckyprice is going to draw statistical reports of products chosen by users and customers for its partners. The majority of coupon services do not provide partners with any access to customers, being afraid to lose them, according to Lishafai.

Some interesting startups appear on the market from time to time, but it is unlikely they will manage to catch up with the giants, believes PR Manager at Pokupon and SuperDeal Kateryna Tryhub. “By all means they will find their market share, as well as stimulate development of leaders and contribute a few ideas, but that will be all,” she says.

Over the last year the number of online collective buying services has decreased significantly in Ukraine. In the summer of 2013 experts spoke about 40 companies operating on this market. Now, there are less than 10 of them, they say. Many small players and some big companies had to withdraw from the market. For example, the Russian service Biglion left Ukraine. Meanwhile, the largest Pokupon and SuperDeal services merged.

Ill fame

“Two or three years ago customers and partners hardly saw the difference between the group buying websites, which sprung up like mushrooms after a spring rain,” says the head of the Russian project KupiKupon in Ukraine Akmal Rakhimov.

Based on the estimates of the head of the Ukrainian representative office of the Groupon international company Mykhailo Deyneha, at the peak of popularity of coupon sites there were approximately 50 of them in our country. Some of them simply copied each other’s offers, sold low-quality goods and services and thereby spoiled the image of the entire sector of collective discounts. Service providers still sometimes can be blamed for dismissive attitudes towards customers, who came to them with discounts.

“I think we managed to solve this problem and show a proper attitude towards our users,” says Deyneha.
Indeed, the image of coupon services leaves much to be desired, agrees the founder of Luckyprice Vlad Lishafai, adding that most of them charge a commission fee of 30 – 50% for their services and with such a margin one cannot put quality products on the shelf. “Therefore, in this way companies usually sell Chinese consumer goods or services,” he said.

New blood

Lishafai’s Luckyprice will be launched very soon and will charge a reduced commission fee (1%). Discounts will be sold through the website itself or through online resources of partner companies (manufacturers and suppliers), who will add a special application to their websites. The size of discounts will change every time you click on a price.
In addition to attracting clients, Luckyprice is going to draw statistical reports of products chosen by users and customers for its partners. The majority of coupon services do not provide partners with any access to customers, being afraid to lose them, according to Lishafai.

Some interesting startups appear on the market from time to time, but it is unlikely they will manage to catch up with the giants, believes PR Manager at Pokupon and SuperDeal Kateryna Tryhub. “By all means they will find their market share, as well as stimulate development of leaders and contribute a few ideas, but that will be all,” she says.

Million dollar discount

Discount online services still remain an attractive business. Despite the reduction in the number of players, the market volume has not gone down. Rakhimov estimated that the market of online group buying services in Ukraine now reaches US $15 – 18 mn per year and a steady upward trend is already being observed. Deyneha provides similar data: the monthly turnover of coupon services in Ukraine has been at the level of UAH 10 – 12 mn as of late.

Every month Ukrainians make close to 150,000 – 200,000 purchases, clarified Trigub. Based on her estimates the average number of purchases per month is growing by 10 – 20%, and even higher, depending on the marketing activities. In summer there is a slight decline in sales, but it is compensated by high bills for the tourist industry. The annexation of Crimea and devaluation of the hryvnia affected vacationers’ preferences: Ukrainians refuse to buy expensive trips to Europe and more often go to the Carpathians. Given this trend, coupon services simply need to adjust their offers

Second wave

This year, the market of coupon services may grow by attracting more people who try to economize.
By categories of offers it now covers not more than 70%, while by the audience –less than 50%. Therefore, it has the potential to double its size in 2014, believes Deyneha.

Managers at Pokupon and SuperDeal assume that if the political and economic situation in the country does not improve, the coupon market will shrink much less than other business sectors and even may experience a slight growth. “One way or the other we expect brand new and interesting customers who will come to us this year. Their purchases will be determined more by their needs than their interests,” summarizes Trigub.

Discount online services still remain an attractive business. Despite the reduction in the number of players, the market volume has not gone down. Rakhimov estimated that the market of online group buying services in Ukraine now reaches US $15 – 18 mn per year and a steady upward trend is already being observed. Deyneha provides similar data: the monthly turnover of coupon services in Ukraine has been at the level of UAH 10 – 12 mn as of late.

Every month Ukrainians make close to 150,000 – 200,000 purchases, clarified Trigub. Based on her estimates the average number of purchases per month is growing by 10 – 20%, and even higher, depending on the marketing activities. In summer there is a slight decline in sales, but it is compensated by high bills for the tourist industry. The annexation of Crimea and devaluation of the hryvnia affected vacationers’ preferences: Ukrainians refuse to buy expensive trips to Europe and more often go to the Carpathians. Given this trend, coupon services simply need to adjust their offers

Second wave

This year, the market of coupon services may grow by attracting more people who try to economize.
By categories of offers it now covers not more than 70%, while by the audience –less than 50%. Therefore, it has the potential to double its size in 2014, believes Deyneha.

Managers at Pokupon and SuperDeal assume that if the political and economic situation in the country does not improve, the coupon market will shrink much less than other business sectors and even may experience a slight growth. “One way or the other we expect brand new and interesting customers who will come to us this year. Their purchases will be determined more by their needs than their interests,” summarizes Trigub.