Ever since the first five group buying websites in South Africa were founded, a few bright minds had the idea of putting all the deals on one website, and in doing so they gave birth to a second wave of daily deal websites. Actually, the first time I heard of it was in a meeting with Andy Hadfield and Henk Kleynhans, where Henk suddenly came up with it. Although by that time it was already present overseas.

The advantages of starting this type of site gives one the same tingle as social buying sites do – they are so easy to start up and seemingly only result in everyone making massive profits. But, as collective buying websites have proven by failing, this is not necessarily the case, and the returns are harder to realize and smaller than you would think. Dealify closed, Zappon closed, Dealio closed and so have many of the smaller sites that were never really on the map.

And so is the case with aggregators now. The returns are small and one actually requires sending a great deal of affiliate traffic through to get the site earning you some money. Add to this the fact that many group buying websites do not even have affiliate programs (although there are now third party programs like AdMarula) and also that some of them do not pay you, and you have a recipe for failure. Groupon, for example, has been noted by aggregators as being exceedingly difficult to partner with.

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Many of you have possibly heard of Google Offers, a group buying division of Google, which, along with Facebook Deals, has had very little written about them after their the initial mention a few months back. The reason for this is mainly that Google Offers is still outside South Africa, and in fact only in a few cities in the US.

After a failed attempt to purchase Groupon (perhaps Groupon should have accepted this offer), Google went their own way and decided to tackle the daily deals arena themselves. After all, Google has massive reach and the ability to enter the market globally at lightning speed, faster than Groupon. Right?

Well, so one would think, and there are many reasons why they should, yet thus far they still haven’t. Why not? Some more about Google’s group buying service.

Advantages
- Google has enormous reach worldwide, in both the number of people that visit its various sites and search engine, and in that it also has major clients who use it daily.
- There is a rumour of firms being able to construct their own deals online without Google having to do anything, and hence a lower commission percentage charged. So far, however, Google has hired sales people to bring in deals, and I haven’t seen this part yet
- Google Offers pays businesses part of their portion upfront (we hear 80%) and part after 60 or 90 days. This is regardless of how many coupons are redeemed. That is mighty fair, considering what is going on in South Africa. Read more about group buying payment schemes on this post too.
- Customers and merchants have the knowledge that this isn’t another group buying site about to go bust.
- Payment, support, etc should all work well (although who knows – the Google Offers team is rumoured to be under 30 people strong at the time of writing
- Google will eventually “distribute” deals to consumers through many other channels in addition to email, including search ads, display ads, Android phones, Google Wallet and “Places” pages.

Disadvantages
- The service is new and only in a few cities in the US. Other group buying sites such as LivingSocial.com (www.livingsocial.com) are already in a few continents and numerous countries.
- If it becomes self-service, adding your own deal not only takes time, but admin and also makes it possible for poor deals to enter the system, no matter what the constraints

One merchant canvassed by Google Offers understood that using them would increase search engine rankings, but it seems this is untrue and doesn’t bode by Google’s mantra at all.

In the beginning, if Google Offers is to become a big force in the deals space, Google is going to have to hire thousands of salespeople. According to Google’s Eric Rosenblum, the Google Offers top dog, Google intends to deal with the “salespeople problem” by making the Offers product as much of a self-serve solution as AdWords. As mentioned above, the company’s hope is that merchants will eventually do most of the work, and the company won’t need so many salespeople.

Why doesn’t Google just stick to getting the deals sold on other sites by charging for PPC campaigns? Perhaps a Google group buying aggregator site like AllDeals or Yadda would bring in only slightly less revenue for a lesser investment? Is Google just barking up yet another tree here?

Group buying in South Africa is reaching a mature level in record time. There are now many group buying websites, all offering a good marketing and customer acquisition service. A good number of them will drop out of the running later in 2011, and the remaining players will form a properly structured industry.

Customers are getting much more savvy as to how group buying works, and are enjoying the experience, if not for a bit of “deal fatigue” when receiving too many offers from certain or many websites.

However, what about businesses – are they reaping the promotional benefits from the group buying campaigns they offer? Are they happy with the group buying experience from a long-term financial point of view, as well as being a client?

Indeed, there are some group buying websites in South Africa and abroad that do not offer optimal service or results, and some that deal superbly with businesses whatever the result. The wrong ones can be avoided by making the following checks when approaching or being called by a group buying company.

Here are some things to look out for: (more…)

Group buying is all the rage, all over the world. In South Africa, numerous industry players have come to the fore since early 2010, and as predicted, some of them are dying off.

In the US, it started two years ago, but its hype has stayed wildly alive with Groupon’s IPO taking the centre stage. Unfortunately many argue that it isn’t the right time, and the rest argue that there will never be a right time. Even so, LivingSocial.com, the second largest group buying site in the US, is now rumoured to be doing an IPO of their own.

Now the blogs and news websites are going wild with speculations of an IT bubble, not simply due to this group buying industry IPO frenzy, but more so because LinkedIn, Twitter, RenRen and even Facebook have made or are looking at IPOs. Now, while investors are hungry for tech stocks, it is quite clear that you need to have made profits and have a sturdy business to list, and to list well.

The website Pandora, an online music service, listed recently, and its shares rose and fell in two days, now at 20% less than their IPO price. Investors have therefore already lost money there. LinkedIn has also lost major share price since listing, as have others. However, LinkedIn still trades above its initial price, which is perhaps proof that things are watertight, for now.

The problem is this, and was aptly described in a post overseas: “Pandora showed that if you’re still trying to figure out your business model and you go public, then the market is going to call you out on it.”

Yet there are those saying that there is no bubble at all. (more…)

With all the fuss over Groupon’s dubious IPO, there has not been much other news in the public eye in the group buying industry. In South Africa, things have been growing steadily and the arena is going to arch a peak this year and Adam Smith’s little invisible economic hand will do the sorting.

So let’s take a lighter look at group buying this week. I keep a very lose eye on the industry globally. How are things going in other countries, in Africa, and more specifically, in Kenya? Naturally the group buying model goes well in countries with some sort of internet penetration. South Africa’s has been quoted as anything from 7% to 15%, depending who you ask, and this gives us an “internet population” of anywhere up to 7.5 million. Kenya seems to have around 6 million already.

According to a man on the ground in Kenya, Mark Kaigwa, and some funky Google skills, I find the following are in the mix in Kenya’s group buying scene:

http://Rupu.co.ke
Rupu is seemingly the biggest, but I watched it recently drop on Alexa, and can’t imagine why. Earlier this year they partnered with Eat Out Kenya. Seemingly the one to beat.

http://Zetu.co.ke
This one uses the same website that old Twangoo used, so there went my dinner. However, do they then potentially have the connections to get on the Groupon bandwagon? This could be interesting.

http://Sokopal.com
Mark Kaigwa mentions them as the first to market, and, like Wicount in South Africa, that doesn’t ensure first place.

http://MyShillings.com

I also noticed this website a while back in Kenya and now see that they are not operating any longer.

http://Zebumob.com
This doesn’t seem to be group buying to me, but nevertheless one to watch.

I came across http://www.groupbuykenya.com/ as well, and I’m sure there are more lying around in cyberspace. Zetu and Rupu were also featured in this post.

However, this all means that Kenya has a very, very small market, which I’m told is due to a smaller infrastructure, but also the difficulties facing small online businesses as well as a different set of payment options in Kenya.

A difficult whois check finds that most of the top global group buying sites’ domain names have been registered – not always by the company themselves. All of this makes for a gap where we could see things changing rapidly soon, as Kenya has the potential to be yet another fresh group buying marketplace.

Do you have any news on Kenya’s group buying scene?

Despite the bandwidth problem with Seacom at the moment, luckily there is still hope to make local internet users more savvy over time. In the US many people visit sites like Woot or Groupon as a way to quickly get access to great deals – however, as a business it makes it difficult to sometimes justify making a special offer available, and then only a few people might take advantage of it. After all, with low prices, high volume is your only choice to be profitable.

South African site Twangoo makes this service now available to us locals, and its offers are currently based on location in SA. The way it works is as follows: Shop A makes a special offer available, provided enough people are interested in it.But this special is only available if these people reserve the offer beforehand, and enough people do this within an alloted time. There is obviously great potential for a service like this.

Here is some more details:

www.Twangoo.co.za, South Africa’s premier group buying club, uses the power of collective purchasing to access exclusive deals on exciting things to do in your city. The Twangoo team has been approaching the aspirational brands across each city and asking them to offer Twangoo members an exclusive deal of such incredible value that they would be silly to turn it down.

However there is a kicker to all this: The deal only happens if a predetermined number of people sign up for it. Members are told via email, Facebook, Four Square or Twitter of any new deal. If they see something they like, they reserve it and when enough people have signed up ‘the deal is on!’ A voucher is emailed and then redeemed at the participating business.

Says Daniel Guasco, Founder and CEO “By using the Web to give consumers buying power through the leverage of groups, Twangoo is a great way to find new and exciting things to do at an unbeatable value. By joining the club – for which there is no cost – you become one of a few with access to preferential deals at Cape Town’s trendiest restaurants, concerts, events, lessons, tours, spas, salons, retail shops, and much more – all with such value that it will be hard to pass up!‘

Upcoming Twangoo deals for Cape Town include:

- An incredible Truth Coffee deal
- A 2 course meal at Savoy Cabbage
- A day of pampering at the Yemaya Health Spa
- A month of boxing training and lessons at the Armoury Boxing Club
- Yoga classes, helicopter flips, dancing lessons, and lots more

At present Twangoo is only available in Cape Town, but this will hopefully change soon enough. If you are a business who wants to see how Twangoo might work for you, contact their CEO at Daniel@twangoo.co.za