Group Buying Trend Beginning to Grow in Middle East Market

Social Buying Firm Groupon Symbol

In recent years the popularity of group buying, also known as social buying, has grown by leaps and bounds. Now a multi-billion-dollar business, group buying businesses such as Groupon have become household names throughout Europe, the US, Australia, China and beyond through their use of daily e-mails and huge discounts on everything from appliances, vacations, restaurant meals, and much more. Each group buying company has its own way of doing business, but the essentials are the same: in exchange for a share in the total profits the group buying firm brings the customers to the retailer’s door.

Social Buying On the Way to Middle East

Group buying, however is taking longer to latch on to the imaginations, and bank accounts, of Middle East residents. Although retail is a hefty slice of the Middle East economic pie; and credit cards are used generously; group buying is lagging behind due to the fact that on-line shopping is still experiencing birth pangs.

“The history of online buying in this part of the world can be measured in days and weeks, not years,” says Dan Stuart, chief executive of GoNabit, which was the first firm to open in this region.

“When we started, people could buy flowers, gift baskets and flights through the internet, but not much else. They had to buy from sites based outside the region but we’ve seen a big shift in that.”

That growth potential is now being exploited by several group buying firms. Groupon is opening offices in Dubai this year, and GoNabit is going to re-brand after being bought-out by another US company, Living Social.

Cash on Delivery, a UAE-owned company, started operating last year. In order to meet the local needs and the hesitation Middle Easterners have about shopping on-line, the vast majority of sales (about 80%) during the first few months of operation were done with cash on delivery. Customers made their purchase on-line, but only handed over the payment when a voucher was physically delivered to them.

“That might sound strange to someone in another part of the developed world,” says chief executive Paul Kenny, whose firm now has more than half the Middle East market share by revenue, according to data from research firm Kongregator.

“But until very recently, that’s the way it was.”