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…)

Oh my gosh, now they’ve gone and done it. Groupon has filed for an IPO, and no-one is really keen to get on the bubble with them. Of all the posts already on the Internet about it, 98% of them are against it, for numerous reasons.

This is a real blow for group buying worldwide, since we’re all in the same industry, and when one of us gets bad publicity, the others get a little of the stench sprayed on us as well. In fact, I’d bet Groupon’s little Google adverts are running right now above this post. Probably for burgers. Num num.

So what are the facts that we know about this IPO? After all, it’s not entirely unexpected at all – they’ve been hinting at this for some time now. (more…)

The concept of group buying has exploded in recent years largely due to the massive growth of Groupon. Their acquisition spree has motivated entrepreneurs all over the world to try clone Groupon’s success in their local market and hope to be one of the lucky startups to exit at the hands of American players’ mammoth $1 Billion funding round.

In South Africa two local entrepreneurs have done just that – Dan and Wayne from Twangoo – by selling 100% of their company to Groupon for an undisclosed amount (our guess is around the $1 Mil mark but some sources say its x6 that amount!).

Groupon’s purchase of Twangoo was one of three acquisitions the US company concluded recently. The other two are Indian daily deal site SoSata and Israeli company Grouper. There have been reports that local media giant Naspers also wanted to acquire Twangoo but lost out to Groupon in the end.

Groupon is looking to dominate every market – even our own, by betting that group buying will be huge in South Africa even though retail coupons have never taken off like they did in America.

“Collective buying is in its infancy in India, Israel and SA but we see strong potential,” says Groupon president and chief operating officer Rob Solomon in a statement.

The Twangoo acquisition seems to be a talent grab as Groupon looks to setup sales and marketing teams in each country by acquiring clones. The technology that powers Twangoo will no longer be used and the Twangoo website is set to shut down soon. Groupon SA will operate under the ‘MyCityDeal’ brand which was another Groupon acquisition in Europe.

What does the Groupon/Twangoo acquisition mean for other players in our local (but small) market? Like Ubuntudeal, WiCount, Dealio, OneDayOnly and more niche sites like Saleswine. We suspect that most of the sites that don’t have any deals on their homepage currently won’t be around this time next year. Although, the race is not over yet – we have it on good authority that a big local media player will be entering the group buying space pretty soon.

Back to the interview -

We spoke to Twangoo founders and asked them about the Groupon deal – was it a cash and/or stock acquisition, how well Twangoo was doing before, why they don’t own groupon.co.za, what their plans are for mobile seeing as they are in a mobile dominated market and how they approached Groupon to setup the acquisition?

The term Twangoo is slang for ‘Tuangou’ the Chinese term for group buying. There is even a well established Chinese group buying site called Twangoo – twangoo.com, seems Dan and Wayne named their company after the Chinese leader? Was there anything original about their Twangoo operation? Does it matter? Say what you like – they just made a few million in under a year.

Let’s call it ‘Right place at the right time’.

Click play below.

Video edited by Le Roux and Nadine, article contribution by David.

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