New Delhi: MagicPin, a Gurugram-based start-up helping restaurants drive sales, is trying to create a social network to succeed in the daily deals business that has claimed several casualties over the past few years.
MagicPin, managed by Samast Technologies Pvt. Ltd, is arming merchants with consumer data and a dedicated marketing platform to encourage repeat buying.
Restaurants and businesses like spas and movie theatres rely on a number of platforms to target new customers. For platforms, the easiest way is to entice customers through discounts, and while a dozen start-ups have tried this approach in the past, no firm achieved scale and investors have largely avoided the space in the past two years.
Launched in 2015, MagicPin is an app that sews together parts of Zomato (restaurant discovery and reviews) and Roposo (themed-based social media network) on the consumer side and Freshdesk (customer management applications) on the restaurant side.
Users join MagicPin by uploading their bills from a local eatery and get MagicPin tokens—reward points—that they redeem at the same or any other MagicPin partnering establishment. In the app, they engage with other users through check-ins, recommendations, and reviews in a live feed-style timeline interface. The platform also doubles as a place for restaurants to post surveys and advertisements.
This behaviour, which is incentivized by redeemable cash points, throws up useful data —frequently bought items, wallet share spending on different items, and location-based activity—which forms the core of MagicPin’s offering to restaurants.
While restaurants have customer relationship management (CRM) tools that tell what their customers purchase, “a big advantage (of MagicPin) is that merchants can now know how much their customers are spending outside of their outlet, and what can they do anything about this basket,” founder and chief executive officer (CEO) Anshoo Sharma said.
“We are able to tell ‘x’ outlet the people who come five times a month usually have this product; the customers live in these areas; their average spend in your café and outside; and that the experience of the staff is better at one outlet vs the other,” he said.
MagicPin is present in Delhi, Mumbai and Bengaluru and has recently launched in Hyderabad, Chennai and Pune. With 1.4 million users, the platform drives Rs30 crore of monthly sales for partner food and beverage (F&B) chains that include KFC and Hard Rock Café, according to Sharma. The company is now expanding into groceries and beauty and wellness segment.
Sharma spent six years at venture capital firm Lightspeed India Partners before starting MagicPin in 2015. Lightspeed later invested $7 million in the firm.
“The idea came from my experience in China where tech has tremendously impacted retail,” he said. China has seen easier proliferation and acceptance of deals portals. In October 2015, two start-ups in the space, Meituan and Dianping, both having raised over $1 billion each, merged operations in a deal valued at $15 billion. A year later, the combined entity raised $3.3 billion.
Groupon Inc, a ubiquitous service for deals discovery present in 28 countries, went public, raising $700 million (the largest IPO for a US internet firm since Google at that time), in 2011.
However, the space has been one of most unsuccessful investment areas in India. Groupon set up India operations in 2010, but ceded control in 2015 to top management and VC firm Sequoia for a consideration of $20 million. Another deals and cash-back platform, Littleapp, launched in 2015 with $50 million investment from Paytm (One97 Communications Ltd), SAIF Partners and Tiger Global Management in 2015.
The two platforms are now in talks for strategic investment or acquisition by Paytm, Mint reported last month (link).
Barring Nearbuy and Little, VCs have largely kept their purse zipped, other than funding smaller deals-- Info Edge’s investment in Mydala, CrownIT’s fund-raising from Accel Partners and Helion Venture Partners, and Times Internet’s acquisition of CouponDunia.
This happened in the backdrop of shut-down of some of the early ventures like Dealsmagic.com, MasthiDeals.com and Taggle.com. Snapdeal, the e-commerce marketplace that was once neck and neck with Flipkart in terms of sales, also started out as a deals site, aggregating deals on products, dine-outs, wellness centers and spas, but pivoted later.
“Food-tech and food enabling tech businesses are on for growth in the country like India. Newer companies are now evaluating a one-stop solution for the restaurant where they manage their CRM, their billing, their table reservation, ordering and customer life-cycle,” said Sreedhar Prasad, partner, e-commerce and start-ups at KPMG. “Deals-alone companies will have a difficult time to survive.”