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Gods of Hungary’s online coupon arena

Retail

The online deal-of-the-day sector is booming, and its top three players are holding their positions. The business model is transforming, however, with products providing a larger share of sales than ever before. Currently, these are the gods of Hungary’s online coupon arena.

“We are taking steps in that direction. Applying the shopping cart was among the first signs, and our product offers are growing in numbers too. The introduction of the home delivery option also demonstrates that we have started down that road,” says Richárd Schmidt, Marketing Director of Bónusz Brigád, the market leading coupon firm in Hungary, commenting on speculation about whether the largest players are turning into discount web shops.

“Our brand-new home page will be structured along the lines of such online stores by incorporating a side bar menu covering all the well-known categories. That should make it easier to browse product and fashion offers.”

Such a development is attributed to the consolidation of the market, although Gábor Kalovits, CEO of Kupon Világ, the second-placed competitor in the deal-of-the-day race, however, doesn’t confirm the trend. “I don’t believe that the leading daily deals sites would undergo such a transformation, but it’s true that products are gaining ground in sales,” he says.

Regardless of alleged or real business model transformations, the first three quarters in 2013 show impressive figures. The total number of coupons sold hit 736,000, generating turnover of some HUF 4 billion.

New darlings of performance
The new darlings of the coupon scene are undoubtedly products, the growth of which contributed considerably to the handsome revenues. Whereas they were barely present a year ago, in 2013 they accounted for 43% of overall gift certificates sold, compared to the 57% taken by services. Another fascinating estimate is that, in the case of Bónusz Brigád, products are projected to surpass even the travel, which has thus far been the largest revenue-generating category by far, by Christmas.

“The leading product groups are subject to seasonal fluctuations,” Kalovits said. “ Some remain popular at all times, such as kitchen appliances, mobile accessories and gift items like jewelry.”

Going wide
Bónusz Brigád is striving to grab the attention of users by offering premium fashion labels, self-imported products and items that have been unknown to the public. It also offers exclusive mobile telecommunication offers, unique in the coupon world.

In parallel with the rise of the products, daily deals sites continue to widen the scope of targeted discounts. So if you are no longer turned on by the temptation of buying a wellness weekend at Lake Balaton at a 60% discount, Miami cruise trips are there to talk you into placing your order. Theme trips increase variety, from the Bavarian Oktoberfest to Christmas fairs in Vienna, and exotic novelties such as tattoo removal and pole dancing courses, add to the choice.

Give us this day our daily deal
Despite of lucrative turnover, there is still further room for improvement at the top of the sector. Take the overrepresented age group of 18-49 year olds. You can argue that, for practical reasons, the young are more likely to go for online services in general. But indirectly, certain gift certificates do end up with the oldies since the members of the younger generation buy them for their parents. Other discounts expressly target the 50+ crowds. Vitamins or wellness packages with age-specific extras work well.

Men should be dragged into the voucher circle to a greater extent too as 70% of registered users are female. Men are being targeted with messages aiming for their weak spots: football and electronics. Tablets and GPS devices do the job according to the experience of Bónusz Brigád. Kupon Világ, in turn, bets on events by linking city visits to Madrid and Barcelona with tickets for Real and Barca games.

If the latter was the only achievement of the deal-of-the-day sector, its existence is already a gift in itself.

There can be only ... three
The Hungarian coupon market is headed in one direction: consolidation. Since the launch of Bónusz Brigád three years ago, companies have popped up by the dozen, applying the same basic idea. By now there are around 20 that can be identified, but only three or four can make a decent living, a recent survey of GKIeNET, a consultancy concludes.

For one, coupon firms are running out of small businesses they can make contracts with. Many clients have also had enough of the game. While they gave heavy price-cuts in the hope of recruiting repeat customers, most of the discount hunters proved to be price sensitive deal-seekers who are interested only in saving and hop on to the next offer.

It has taken a while here for businesses to realize what the scheme is meant for; its purpose is, most of all, to get inexpensive publicity with a large audience. Companies abroad have come to terms with the substance of the deal and they use such campaigns to build brand loyalty with the help of cheap advertisement or to quickly sell surplus inventory.

No fan base, no fun
In Hungary, the war for the VIP boxes is apparently over. The market leaders Bónusz Brigád, Kupon Világ and Napi Tipp cover around 80% of sales. Not even media heavyweights like Sanoma could change the pattern. It was forced to quit its coupon operation after just one year, having failed in meeting the most important criterion in this business: creating a fan base.

Bónusz Brigád, which alone rakes in nearly half of all the market revenues, explains its success with a strict HR policy. It selects the right person for each position even if it takes months. It also spends a lot on development. Their new web site, scheduled to go live soon, features a mobile-optimized system and the size of their “physical” store has been doubled.

Main rival Kupon Világ sees no reason to join forces to form an alliance against the advance of Brigád. “We are not planning a merger with other market players, we would like to go our own way. We want to serve our large customer base, providing the same high quality as up till now, and to maintain our level of commitment towards our distinguished business partners,” Kalovits insisted.

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