Online group buying takes off in post-crisis Gulf
Gonabit, Cobone are expanding across the Middle East region
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.