While the group buying hype that hit SA in 2011 had largely petered out by last year, by which time hopefuls like Dealify, Zappon, Dealio and 247deals had long closed their doors, Groupon SA may quietly be keeping the e-business genre alive.
Although its marketing has been described as considerably less boisterous of late than when it launched in 2010 - initially as Twangoo ("group buy" in Chinese) - recently appointed CEO Emilian Popa says Groupon SA is still alive and kicking.
A self-described serial entrepreneur, e-commerce whizz Popa took the reins from his two Twangoo co-founding fellows Daniel Guasco and Wayne Gosling in July, after their contracts with the company ended.
Popa started Rocket Internet SA and ran it as MD, while founding the first two Rocket ventures in the country, local online fashion store Zando and online home and furniture store 5rooms. He has an MBA from Columbia Business School and London Business School.
Without being able to cite figures, due to what he says are restrictions around being a publicly-listed company, Popa says Groupon SA's consumer database has grown substantially. Since Groupon bought Twangoo in 2010, he says, "[Groupon SA] has become one of the top e-commerce players in SA."
At the time of the local group buying buzz, marked by Twangoo's foray into the e-business market, the company was seen as a fierce competitor to Kalahari, which was at the time about 12 years old. Since then, however, industry watchers have questioned the effectiveness of the group buying/daily deal site business model.
Under pressure?
World Wide Worx MD Arthur Goldstuck says Groupon SA is "doing a good job of camouflaging themselves nowadays" - although he is not too sure why this is.
"I think the business model is under pressure. The big problem with coupons and daily deal social shopping sites is that they have to keep finding new customers because merchants cannot use this means of discounting their goods all the time - it is not sustainable for individual merchants. So the model is under pressure to bring in new business all the time."
But, he says, this does not spell the end for Groupon SA. "Groupon is too big to shut down - it has too big a customer base. They do need to innovate, though. I haven't seen any innovation from them in a while. The social shopping context is good, but it should be geared to economies of scale, rather than forcing discounted services."
Goldstuck says most of the other daily deal sites that braved the space soon left it "with their tail between their legs". He says part of the problem was the mistaken notion that big communities would convert into business. "It doesn't work that way."
ICT expert Adrian Schofield says the group buying market has declined considerably. "To be sustained, the vendors who offered the discounts need to see repeat business from the customers attracted by the special offers. Many vendors found that the consumers enjoyed the loss leader purchase, but would not come back at full price."
Customer view
Online consumer site HelloPeter features a number of disgruntled online deal-grabbers' complaints, over failure to meet delivery commitments, slow refund processes and poor after-sales service.
But Popa says more than 75% of Groupon SA's partners are "highly satisfied", while over 80% of its customers say they are likely to return to the merchant they took an offer from. He says Groupon SA works with thousands of partners across four categories - local, travel, goods and ticketing.
Asked about his thoughts on the string of failed ventures in the space, Popa said group buying sites would have to establish themselves as major go-to destinations. "Groupon has made significant progress towards this goal."
As for his vision for Groupon SA, Popa says: "My focus is on improving customer satisfaction and I strive for our customers to love us the way they used to in the beginning stages of Groupon SA. This means I continue to grow the business profitably and sustainably, while turning the company into a customer-centric organisation."
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