If you live in countries like Singapore and Malaysia, you’d probably have come across FavePay stickers like the following:
Fave, which bought Groupon’s assets in several Southeast Asian countries, is probably most similar to Meituan’s original design: deals for services, traffic, and potentially payments. Meituan subsequently progressed further to become the (or one of the) biggest in many domains, including food delivery. It even launched an assault on Didi (probably one of the reasons why Grab wants to evolve into a super app).
Will Fave achieve the same?
History of Fave
Fave is a platform offering consumers discounted offers and cashback on services, with both web and mobile applications.
Originally going by the name of Groupon, it underwent a complete overhaul and was rebranded in Southeast Asia as Fave, a decision made by the Fave Group which acquired Groupon’s Malaysian, Singaporean, and Indonesian arms between 2016 and 2017.
As a part of Fave Group’s business growth strategies, it abandoned the goods categories, which Groupon had previously clung onto, trying to revive its fortunes. It didn’t succeed. Thus, it evolved into a site dealing primarily in services.
Where Fave fails
As we’d previously outlined, a key shortcoming of deal sites that offer location-based services (like Fave) is the need for consumers to be physically at the shop to redeem the deals they’d bought.
And like it or not, most people do not move that much spare time as they go about their daily routine – even though it’s commonplace to enjoy frequenting different restaurants for each meal. Arguably, the only place people frequent on a daily basis is either the canteen (if your establishment has one), or the food court (a more likely choice for urbanite lunch-goers).
So to ensure user stickiness, Fave has to cover all the frequently-visited establishments in each neighbourhood…
Therefore, when you go to a real nice place where a discount can be gotten by using Fave, you download, register, and redeem. However, it takes perhaps another 49 days to arrive at another establishment where Fave can be used…rather obsolete, isn’t it?
Meituan’s power lies in its ubiquity – wherever you go, you can be sure to find it in most if not all of the shops. And when you use it for its food delivery service, a large majority of F&B outlets are on board as well.
To achieve something on the level of Meituan, a hyper local and aggressive strategy is needed – acquiring all the relevant F&B outlets in a mall. And when I say all, I mean ALL of them. Otherwise with only a few shops interspersed here and there – stickiness for the consumer can never be achieved.
That said, many businesses in Southeast Asia would rather achieve a wide coverage (i.e. width) before density. This, to us, is a wrong strategy – because it puts a stop to getting anywhere.
Similarly for FavePay, while people complain about the UX being poor, the true problem is – it is redundant. People who have credit cards would use credit cards (for credit as well as points); people who don’t pay in cash. Why should you use FavePay (or even GrabPay for that matter)?
Aggressive, and concentrated
Fave has the potential to be much, much bigger if it follows Meituan’s strategy and trajectory. It is a proven model. However, to succeed it needs strong operations on the ground and an aggressive but disciplined sales force.
Whether its investors have the patience is another story.