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Revenue generated by mydala offer where you get a chance to win 1.5 ton AC – Approximate Calculation

26 May

Recently the group-buying sites in india have started putting up offers like the following

Buy this offer for company X, at Rs.RR and buy yourself a chance to enter a contest to win product P

Buy this offer for company X, at Rs.RR and buy yourself a chance to enter a contest to win product P, at a discounted price

Now this is simply a strategy to get more eyeballs to enroll for a lottery contest. Nothing is wrong here, ethically, logically and legally it is very much correct way of getting more people to buy into this lottery.

You don’t really get the item. Agreed that investing amount X in this offer and it doesn’t yield, you get a “gift certificate” of equal amount that can be redeemed atht esame website.

So 1/2/3 people may win this product based on a lottery system.

Now this kind of offer is not really group buying and is an intelligent way to generate revenue and possible attract new users.

I just tried to work on the revenue aspects of this offer based on some assumptions.
Now this itself is very much like a lottery. Group buying websites actually running a lottery model in garb of group buying offers may or may not be ethical, but who cares

So at this moment, May 26, 2011 exactly 3.26 pm, there are 504 instances of this deal that were bought.
Following is my analysis and the revenue the website will make based on some assumptions

Price

 INR                            99.00

Number of buys

504

Total money received from deal sale

 INR                    49,896.00

Actual cost of product

 INR                    25,000.00

Actual price of prioduct

 INR                    30,000.00

Number of give aways

1

Cost of giveaway

 INR                    30,000.00

Cash accumulated (cash that will go no where)

INR 24,896.00

Total buyers who have been awarded 990 points

503

Equivalent points awarded

497970

Validity of the points

60 days

Hit ratio (Ratio that users will utilize the 990 points in next 60 days)

70%

Buyers utilizing the 990 points each

352

Deals getting sold post the offer for redemption of 990 points

Deal Price

%age share of the deals getting sold

Number of buyers utilizing specific deal and using 990 points

Revenue from deals

Assuming margin of  5%

Buyers buying deals worth 99

 INR                            99.00

30%

105.63

 INR                   –  

0

Buyers buying deals worth 199

 INR                          199.00

30%

105.63

 INR    10,563.00

 INR           528.15

Buyers buying deals worth 299

 INR                          299.00

30%

105.63

 INR    21,126.00

 INR        1,056.30

Buyers buying deals worth 399

 INR                          399.00

10%

35.21

 INR    10,563.00

 INR           528.15

 

 

 

 

 

 

Total

 

 

 

 INR                                         2,112.60

TOTAL

 INR  27,008.60