Here is a group buying site with a different proposition. Groffr.com, which is looking to offer group buying deals for high-end products from real estate to even helicopter tour rides, is seeking Rs 5 crore in funding to accelerate its growth.
Started by two IIM-Kozhikode alumnis Vikhyat Srivastava and Sandeep Reddy, the startup is looking to open offices in top metros besides investment in marketing and technology.
Groffr, which derives its name from group offer, has till date done savings of Rs 19 crore on real estate deals worth Rs 91 crore (including the savings) for its customers. The Mumbai-based startup expects to cross net revenues of Rs 1 crore this fiscal year, said Reddy.
Both Srivastava and Reddy quit their jobs earlier this year to dedicate themselves full time on the venture. While Srivastava was with Kotak Real Estate Private Equity Fund, Reddy was the real estate analyst with Kotak Institutional Equities.
Group buying has become a phenomenon across the world and more than a dozen websites have also cropped up in India, some of which have also raised funding. But these players usually transact over the internet on deals for restaurant meals, salons, etc. But Groffr says it’s the only group buying player that offers products like real estate and cars, besides Blackberrys, bikes and LED TVs.
In order to give more deals and address the issues of scale, Groffr has recently launched a a product of user suggested deals. “If users can suggest deals and themselves form groups it makes our job easier since when we approach the developers, we already have the buyers, explained Reddy, who said the response has been phenomenal.
This initiative already has around 15 live ‘user-suggested’ deals on the site, with another 250 request waiting to go live. Groffr could also take this further by inviting developers/manufacturers to come and bid for the buyers when a significant group is formed, which may yield better bargains.
Also, Groffr is looking to create annuity based models in this business and has started charging sellers for just listing their products. “Traditionally, areas like real estate brokerage was a service business but we are trying to create a product-cum-service play so we have some annuity revenues besides transaction fees,” said Srivastava.
Groffr, which was launched on July 27, has been gaining traction and reached 50,000 hits on Thursday. Owned by Mumbai-based ICSPL, the company initially did deals through , the largest B-school alumni network in the country with 8,000 members. The first deal came last year when Verkko sold 35 flats in Oberoi Splendor (Andheri East, Mumbai) at a discount of 32%, where the market rate was Rs 10,000 per sq ft.
“But there came a point where we realized that the B-School platform was limiting the prospects of the business model itself,” said Srivastava, and thus came Groffr.
Reddy and Srivastava also point out that there are softer aspects to group buying. One is the power of collective wisdom when you are buying in groups, where people may know things you are not aware of. Also, when you are buying real estate in groups you can also select your neighbors.
Groffr is planning to open offices in top cities like Pune, Bangalore, Hyderabad, National Capital Region and Chennai. Each office would have around five employees, which means an addition of 25-30 to existing 8 employees in Mumbai. It will also increase brand awareness with online and offline ads.
“We also plan to invest more in the technology as users become more entrenched with new functions like search, bidding platform, among others,” said Reddy.
Group Buying Gaining Momentum
The group buying space has seen Indian players like SnapDeal and MyDala already establish their presence in multiple cities. The competition is increasing in this space with other players like Grabbon, Koovs, Mobstreet, Group2deal, Lootmore, etc.
Delhi-based Jasper Infotech, which runs SnapDeal, has raised funding from NEA-Indo US Ventures. It also acquired Bangalore-based group buying firm Grabbon in June this year.
Taggle, which has started its services in Bangalore, has got $8.75 million funding commitment from Battery Ventures and Greylock Partners. MyDala has also raised venture funding.
Another deal in India in the group buying space recently was when Deals And You, a venture between the Group Buying Global AG & Smile Interactive founder Harish Bahl, acquired Gurgaon-based Wanamo Marketing Pvt. Ltd (WMP).