Group buying & saying no to Google’s billions

In the 90’s start-up IT companies dreamed about been bought out by Microsoft, and many were. In the 0’s internet start-ups dreamed about been bought out by Google, and many were. Today’s start-ups, apparently, dream about turning down Google. And that’s what Groupon has done – the group buying giant from the States has reportedly turned down an offer of $6 billion from the search engine giants; this for a business that was started in November 2008.

Who and what are Groupon and what do they do? Groupon is the largest collective buying or group buying site in the States, and I imagine, the world. These sites secure group deals with companies, whereby the deal, which is offered at a discount from between 20% to 90 %( depends on the site and the deal), only kicks in when enough people buy it. The site acts as a conduit between the supplier and the public, offering the supplier publicity, marketing and often some much needed business.

South Africa has about 20 group buying sites and it looks like this year will see Group buying really take off in South Africa. Groupon have made their move and bought local guys Twangoo and there are a number of guys staking their claim in this potentially lucrative industry.

The more the merrier I say, and although I have been slightly under-whelmed by the deals on offer – my low-maintenance self doesn’t do beauty treatments –  this should definitely improve as the industry and awareness grows.

One of the local contenders, is just four months old but is already making a name for itself; I spoke to internet entrepreneur and Ubuntudeal
group-buying specialist, Jess Green.

Do you think this is the year for collective buying to take off in South Africa?
I think it took off in 2010, but this year we’ll see a phenomenal growth in the industry.

There are probably 20 sites in SA at the moment – what sets you apart from the others?JG:
Quality, not quantity. Firstly, our deals are always at least 50% off. No other group buying site in SA has adhered to this at all. It’s easy to ask for 25% or 40% off. Hence, we have had fewer deals, but they’ve given the consumer a bigger and better deal. Secondly, our site is the best by far. We’re the only ones to have film/video on every deal, who have an updated blog, who have a scalable site that can hold millions of users, if and when it comes to that. 🙂 We are also very strong on customer-service; something the group buying industry is notorious for being bad on. We have our 0861 UBUNTU number – we’re a real company out there, not a one man band like many SA group buying sites.

I see many of your deals are spa and treatment related, what other kinds of deals will there be?
I think on all group buying sites there are more spa deals than others, but we still have one of the best spreads in terms of deals. Just look at our Underground Cape Town adventure, our yoga classes, restaurant deals, t-shirts and much more.

I see Groupon have bought Twangoo – your thoughts
Yes, they did. Twangoo grew quickly due to getting deals on the one hand, which I applaud them for. They also got subscribers abnormally quickly, mainly through spam, which I, well, don’t applaud them for. Groupon doesn’t mind if you’ve grown due to spam, they bought a Brazilian site too which had even had court action against them for spam. It’s an unfair method of growing quickly, but I suppose it’s worked for them.

Do you know what they paid?
No, and I don’t think this is important. What is important is how they were bought. I see that the owners are now on contract for three years for Groupon. That tells you they weren’t just paid a lump sum, and were probably tied into what Groupon usually does – a revenue sharing offer. This could be the right or wrong choice for them.

How do you feel about these guys entering the market?
How many banks are there in South Africa? How many car companies? I’m elated – the group buying industry worldwide will now look to SA. LivingSocial and BuyWithMe are coming too. The world is now watching us much more closely.

How many people are you at UbuntuDeal?
Including the whole team, 12 people.

Where do you see UbuntuDeal in two years time?
That’s a tough question, because in our industry, two years is a very long time! UbuntuDeal will probably have been bought by then, but our quality focus will always be there. We’ll be sure to still have the best deals and service.

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