Groupon’s India business, which had some lousy PR a few months ago after it accidentally published 300,000 passwords, is somewhat redeeming itself in the eyes of Indians right now with a special deal: 1 kg (2.2 lb) of onions for Rs 9 (14 US cents). That is a fraction of the market rate, which is hovering between Rs 60 and Rs 70 a kilo. More than 5,000 people signed up for the first day’s deal—which comes with free delivery across 78 cities—before it expired.
Not all 5,000 will get the deal. Groupon has promised to put onions up for sale at Rs 9/kg every day for seven days, but with a daily limit of 3,000 kg. If it’s buying them at a market rate of Rs 65, that works out to a loss of Rs 1.18 million or a little under $18,000 not including shipping costs. Even at average wholesale rates of Rs 30, that’s still a $6,700 outlay. But that is a small price to pay for what will certainly give thousands of Indian families a reason to keep returning to Groupon.
The onion is perhaps the most telling indicator of economic problems in India. A staple that forms the basis of most Indian food, it makes headlines every time prices shoot up, which they have done throughout August (see chart below). The price of a kilo of onions in India’s cities has more than doubled since the beginning of August, from less than Rs 30 (45 cents), adding to Indians’ woes about the crashing rupee and rising inflation.