x Abu Dhabi, UAEThursday 18 January 2018

Groupon overhauls Middle East management

Change of management at Groupon Middle East comes at a time of intense competition among daily deals websites.

The Groupon headquarters in Chicago, Illinois. Scott Olson / AFP
The Groupon headquarters in Chicago, Illinois. Scott Olson / AFP

Groupon has shuffled senior management of its Middle East operations as the daily-deals giant struggles to boost its market share in the region.

The offshoot of the site that is based in the US offered its first UAE promotion in March, but has failed to gain significant ground on Cobone, the local leader in the market.

Groupon, which is expected to be valued at up to US$25 billion (Dh91.82bn) in an upcoming initial public offering, has appointed a new chief executive for the Middle East at a time of intense competition among similar "group-buying" sites.

Ainsley Duncombe, who co-founded the discounts site LowCostDubai.com, took up the position as chief executive of Groupon Middle East on August 1.

He is understood to have replaced Faisal Haq, who was previously the managing director of Groupon Middle East.

Mr Duncombe confirmed Mr Haq had left Groupon, but would not specify a reason for his departure. Mr Haq declined to comment.

Groupon is underperforming in the UAE daily deals market compared with its operation in the US where it is the market leader.

According to data collated by the publisher Business Insider, Cobone turned over almost three times Groupon's revenue between May 14 and June 14.

Karima Berkani, a research analyst at Euromonitor International, said that may have been a factor behind the recent management change.

"It is interesting to see a daily-deal site such as Groupon reshuffle management so early in the game," said Ms Berkani. "But it is probably indicative that they are not performing as well as they would like."

Groupon is rumoured to be suffering in markets outside the US where it has tried to take on local players.

It entered the Indian market six months ago by acquiring the local website SoSasta and is now reportedly also looking to reorganise senior management there.

It also emerged this month that Groupon's joint venture in China, Gaopeng, is laying off staff in the face of intense competition from other players, according to Reuters, quoting the 21st Century Business Herald Chinese newspaper.

Groupon rose to prominence last year when it walked away from a $6bn takeover offer from the web search giant Google.

The site, which offers daily discount deals in hundreds of cities across the world, is the number one group buying site globally. It has filed documents for its much-anticipated IPO.

But the rise of Groupon has prompted a number of competitors to spring up; there are up to 20 group buying websites in the Middle East region, according to some estimates.

The website requires retailers to sign a contract of exclusivity for six months to a year, and given that many companies promoting themselves through daily-deal websites are new to the market themselves, analysts say signing an exclusive contract may not be in a local startup's best interest.

"It makes sense then for retailers to partner with companies on a deal-to-deal basis rather than agreeing to use Groupon exclusively for a year, regardless of their global presence," said Ms Berkani.