Home / / Online group buying takes off in post-crisis Gulf

Online group buying takes off in post-crisis Gulf

Gonabit, Cobone are expanding across the Middle East region

Dan Stuart, CEO of Gonabit says that group buying is now part of companies marketing strategies.
Dan Stuart, CEO of Gonabit says that group buying is now part of companies marketing strategies.

Online group buying is flourishing in the post-recession Gulf, as hotel, retailers and restaurants increasingly look to deal websites to bolster their sales.

Local sites that offer limited-life, no-strings discounts on items ranging from spa treatments, meals, hotel stays and even designer goods, say they are seeing a surge in traffic as companies catch on to the concept of collective buying.

"It's much more of a central part of their marketing mix now. The whole understanding [of the way the business works] has changed a lot," said Dan Stuart, CEO and co-founder of Gonabit.com, which launched its operations in the UAE last year.

The concept is simple: the sites offer daily deals in which people can score cut-price bargains, but this is often dependent on enough people signing up for the discount. The method can also let bargain-hunters sample new brands, potentially turning into repeat business for the companies that participate.

Cobone.com, a website that offers 50-90% off spa days, dinner and hotels, said it is increasing being used as a marketing tool to boost company profiles.

"We pitch ourselves not as a discounting site but as a marketing tool to bring in the customers so that they can have a chance to create a loyal customer. It becomes a tactic that can be included in a greater marketing campaign," said Warrick Godfrey, head of marketing for Cobone.com.

Though a relatively new concept in the Gulf, the region has seen a rash of discount buying sites spring up in the wake of the financial crisis.

The UAE, with its high disposal incomes and more advanced e-commerce payment systems, represents the majority of business for discount websites.

Sukar.com, which offers up to 90% off designer products such as clothes and perfume, said that 40% of its members are based in the UAE while Gonabit.com estimates the figure to be as much as 75%.

In May, Gonabit.com announced its launch in Cairo while Cobone.com - which operates across nine cities in five countries - has said it is expanding aggressively.

"We are looking at more cities in Egypt and in additional countries throughout the Middle East [and] we're looking to increase our revenue by well over 100% by the end of the year," said Godfrey.

The global economic downturn has made consumers more price conscience and, as a result, traffic to group buying websites has increased. Sukar.com has built up a membership database of half a million users in one year.

"It's a win, win situation. The customers are enjoying great prices, we're behind the business and they [retailers] have turned their inventory into cash," said Saygin Yalcin, founder and president of Sukar.com.

The website plans to launch a leisure service to offer discounts on hotels within the next quarter, he added.