Analysis of User and Merchant Dropoff for Sugar App - Project Overview

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Background		Data Source		Methodology

Project Background

We are currently living in a digital age where possibilities are limitless. Rapid technological advancements has continuously shaped and changed our attitudes and behaviours towards different aspects of our lifestyles. With this move towards a more digital society, conventional shopping that has traditionally been taking place in brick-and-mortar shops are now gravitating towards online platforms for ease of convenience and getting a better deal.

Singapore has the highest smartphone penetration rate in the world at 88%, ahead of other countries such as Hong Kong, Australia and the U.S. For local businesses, consumers typically look for Price (38%), Quality (38%) and Availability (28%) before making a purchase decision. Approximately 42% of Singaporeans also turn to local discount websites such as Groupon, Deal.com.sg, Lazada and Qoo10 in search of better deals to secure better value for their money spent.

Introduction of Sugar

Sugar is an interactive city guide that seeks to encourage a culture of exploration in Singapore and helping local small businesses get discovered.

Currently, Sugar operates in 3 countries – Hong Kong, Jakarta and Singapore. It originated from Shanghai where it has experienced tremendous success of over 250,000 users a day and hence, the founders has decided to expand its operations to Singapore in early 2014.

Sugar has discovered that convenience is an important factor for users when selecting a local business. (See Fig.1) Thus, as a city guide with its location-based features, it hopes to revolutionise the online shopping industry.

Mechanics of Sugar App

Sugar exists as a platform in a two-sided market. Like many other two-sided markets, it connects users to merchants and earn fees for connecting these 2 groups.

There are 2 main stakeholders of the Sugar App: Merchants and Users

Sugar’s Merchants are mainly small local businesses in Singapore. It has a large variety, including cafes, small restaurants, bars, hair salons, gyms, gift shops. The benefits for Merchants is advertising to users that are in close proximity to them. As mentioned before, convenience is an important factor for a purchase decision and thus, Sugar is leveraging on this aspect.

Users derive benefits from the discounted deals on the app. For example, the typical deal can be a 50% off truffle fries at a restaurant near them. Since price is highlighted as extremely important, this can entice existing users and new users to check out deals on Sugar app.

The location-based feature also provides them with ample opportunities to explore hidden gems and new establishments in their vicinity.

To implement a level of interactivity, users are able to reduce the price further using a “Skimming Mechanism” and get their friends to help them using a “Spread Mechanism”. This encourages users to purchase items off the app after it has been skimmed to a price that they deem as cheap and it also increases the word-of-mouth when users mention Sugar to their friends.