‘Social-commerce’ firm enjoys rapid growth
It is the first venture to blend the marketing strength of online social networks – especially that of Facebook, the most popular – with services offered by offline business.A new company called Ensogo is creating a sensation among social-network users in Thailand.
Ensogo is a local company that provides what it calls a "social commerce" platform for small- and medium-sized enterprises (SMEs). The concept enables SMEs, especially those in service industries, to optimise the core features and functions of social networking to enhance their real business. They offer their "best deal" – usually a discount of 50 to 80 per cent – for sales on Ensogo.
The company’s managing director Tom Srivorakul said the idea was inspired by the largest "deal-of-the-day" website in the United States, called Groupon. It was launched November 2008, and having apparently "cracked local online advertising, is growing insanely fast," he said.
"We have followed this successful model, but we have customised the deal to fit the needs of consumers in Thailand and Southeast Asia," Tom said.
Ensogo is designed to offer the best daily deals in the service industry, including hotels, restaurants, spas, trips and activities and health and beauty, for consumers across Southeast Asia. It began earlier this year, and covers Thailand, the Philippines, Indonesia, Singapore and Malaysia.
Behind the best daily deal service, the company has created a social-commerce platform and recruits merchant partners to participate by offering their best deals for Ensogo’s members.
"Our business in Singapore and Malaysia is a joint venture. We have joined hands with Dealguru in Singapore to offer services at Deal.com.sg and Dealkern.com," Tom said.
The best daily deal concept involves a company offering its most attractive promotion by selling vouchers at Ensogo’s website and from the Facebook page www.facebook.com/ensogothailand - for which there are currently about 43,000 fans – for a limited period of only two days.
"Mainly, at Ensogo, the products are offered with 50- to 80-per-cent discount vouchers. The deals are dynamically changed every two days. Consumers do not know what deals they will be offered when they visit our website. This is to make them revisit our website as a routine activity. Our marketing strategy is to share all updated daily deals on Facebook, so as often as they log on to the social network, they will meet us," Tom said.
Ensogo’s service follows a social-commerce model. Most transactions occur at his company’s website, but online social networks have played the role of a marketing channel in distributing messages of promotions and deals and drawing Internet users to Ensogo.
"This business model is suitable for service industries that need the social networks as a marketing channel to draw consumers for their services,’ he said.
Ensogo has a sales team to work with merchant partners, a production team to develop content and a marketing team to promote the deals on social networks. Currently, Ensogo has 220 merchant partners, with another 120 merchants on its waiting list.
To shop for the deals offered by Ensogo, consumers have to register as members of the website by giving names and contact details to the company. Ensogo offers several payment methods, including credit card payments, ATM or bank-account transfers and payment at the company’s office. The minimum transaction amount is Bt50 and the maximum Bt8,000.
"Our income is a 40-per-cent share of the revenue from each deal," Tom said. "The beauty of this model is that merchants do not have to invest in developing an online shop or in social-network marketing. Importantly, they have no costs; they are not charged before their vouchers are sold. This model is very beneficial to SMEs."
After operating for only five months, Ensogo is currently selling an average of 800 vouchers per deal and offering 70 to 80 deals per month. It plans to increase its average selling rate to between 3,000 and 4,000 vouchers per deal and to offer as many as 160 deals per month.
It also plans to increase its membership from 100,000 at present to 500,000 next year.
"In the five months that we have been operating, we have sold a total of more than 40,000 vouchers. We have aggressive plans to increase this number to 1 million next year. We are very fast growing. Having started from zero, we have attracted a lot of merchant partners and consumers. The best daily deal is attractive in itself, but the social-network involvement is a very important part of the jigsaw to match the deal," Tom said.
Ensogo is also planning to optimise its network across Southeast Asia to offer cross selling and promotions among countries, as well as expanding into emerging social-network marketplaces like Vietnam.
"If our role model, Groupon, is the largest social-commerce operator in the US, then Ensogo is the largest such operator in Southeast Asia," Tom said.