Groupon eyes six new regional offices

Daily deals site expects further consolidation in UAE market after LivingSocial’s exit

Tags: E-commerceGroup buyingGroupon (http://www.groupon.ae )
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Groupon eyes six new regional offices Groupon is looking for GCC expansion.
By  Claire Valdini Published  September 20, 2012

Groupon Middle East plans to open up to six offices in the GCC as the world's largest online daily deals provider looks for new ways to build market share, its CEO has said.

The firm, which will open an office in Oman, Bahrain, Qatar, Kuwait and several in Saudi Arabia, expects the group buying market in the UAE to further consolidate as it reaches saturation point, said Alexander Kappes.

"Right now we are looking at the region. The markets that are most interesting right now are the GCC markets like Qatar, Bahrain and Saudi Arabia.

"Kuwait and Qatar have been showing very strong GDP growth over the past couple of years and due to the size of them - they have a large expat community - it's an interesting market because you can go in there and start business very quickly," he said, declining to give a timeframe. 

"We want to do the whole market at once. In Saudi Arabia you need to scale the company and business very quickly... we would be looking at least one head office or two head offices," he added.

Groupon shares have lost around three-quarters of their value since the firm made its debut on the NASDAQ in November.

The company once hailed as the fastest growing internet firm ever reported a 45% increase in global revenues in the second quarter but missed analysts' expectations by $5m. Shares hit a record low of $4 on 4th September.

The decline has led to questions being raised about the sustainability of the daily deals business model. Chief financial officer Jason Child earlier in the month said the company is taking steps to help drive its growth in Europe.

The website will introduce technology that enables the website to send more relevant deals to its subscribers in Europe, said Child. "It's one of the primary drivers we expect to see in the back half of this year," he said.

"That should be one of the solutions for helping us to drive growth in the future," he added.

Several daily deals websites have closed down operations in the Middle East amid increased competition. Groupon's Washington-based rival LivingSocial in August said it had closed down its operations in the region as it moves to concentrate on opportunities in other regions.

Groupon Middle East is making a profit but expects more than half of its rivals to close down their operations in the near future, said Kappes. "I expect a strong consolidation in the market," he said.

"Right [now] we are looking at around 27-30 businesses in the market... I think a good number would be about five businesses if you are looking at businesses that can cater to different needs," he added.

2118 days ago
on tenterhooks

Economies of scale is a simple principle to be kept in mind prior to be inquisitive on business model of daily deals. Merchant-daily deal publishers alliance if expected to flourish in Qatar and others is because of high numbers of units sold, encouraging retailers to bring down prices. Keeping complaints aside, shopping experience has improved after advent of daily deal phenomenon. This is evident from a flurry of newsletters a subscriber still gets from daily deal sites as big as http://www.groupon.ae and as small as http://www.tipadeal.com.

2270 days ago
Mohammed Sayeed Khan

Groupon does not give Genuine products Fake Product eg. Snore Stopper and looks cheaper, but when u buy u end paying more...Many hidden charges and deliveries are also not in time. I think this is why it is going down.
When u r selling the products online, Groupon should check the product and then put on the website...

2273 days ago
Vinod Mehra Edited by ITP.net

Groupon started with a simple idea and a big bang. Soon we had copies floundering around the globe. The group buying business is easy to enter but demands deeper pockets and Groupon on has deep pockets to sustain. But how long ?

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