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.
“œCollective 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.
