Group buying websites let people join forces to grab great deals by buying in bulk, an idea that has been welcomed by consumers and businesses.
Use the mob mentality to stretch your savings
The moment Debbie Gibbs saw a yoga class offered online for an eye-popping 50 per cent discount, she knew she had to nab it. The Abu Dhabi-based homemaker read about a new website her friends were talking about on the Abu Dhabi Woman message board (www.abudhabiwoman.com) and her interest was piqued. The website, GoNabit.com, offers discounted products and services such as steak dinners, exercise classes and family outings with a twist.
Once she saw the deal - Dh250 for unlimited yoga sessions at the Yoga Tree and Soma Pilates in Abu Dhabi - Ms Gibbs whipped out her credit card and bought a voucher. "I think it's great," says Ms Gibbs. "It's not very often you get something for half price." The twist is a new spin on an old trick. While group buying has been around for hundreds of years, it is only beginning to become successful in the online world.
Here's how it works: every day or so, a new deal appears on the website for a limited time - usually 24 hours, but sometimes longer, such as over a weekend. The deals - which range from 50 to 70 per cent off the retail value of the product or service - can only be "nabbed" if a certain amount of people agree to sign up for it before the alloted time expires. If enough people cross the assigned threshold, the offer "tips" and everyone gets their deal. If the minimum isn't reached, everyone gets their money back.
"You're not going to buy a service for Dh700," says Maidy Cook, a human resources adviser for Dubai Petroleum, who bought a massage for her husband. "You're going to think, 'Do I really want this?' But since they offer it for half the price, it's worth it." Sound familiar? If it does, it's probably because group buying has been around for centuries. When traders arrived at villages, townsfolk agreed to band together to secure goods for a discounted price.
The buyers are happy because they get a better deal than if they were to buy the product on their own, while the seller is happy because they can still generate the same profits through lower margins as long as there is enough volume sold. But it is the recent rise of e-commerce across the world that has made group buying relevant again. In the span of two years, websites such as GroupOn and LivingSocial have taken the idea by storm and turned internet start-ups into billion-dollar companies.
That success helped to convince Dan Stuart, the chief executive of GoNabit, that online group buying might actually work in the Middle East region. After only two months in business, it appears that Mr Stuart's guess is correct. "When I was looking at ideas to launch my own start-up, I thought that this was something that could work in this part of the world," says Mr Stuart. "Dubai is a mall culture where people use shopping as a social experience. While we don't ship products, you're essentially buying stuff from us while maintaining real world social experience."
Since Mr Stuart launched GoNabit about two months ago, more than 1,300 transactions have taken place, saving consumers about Dh200,000. The website takes a share of the deal only if enough people sign up for it. GoNabit recently opened a local website for Abu Dhabi (www.gonabit.com/abu-dhabi/) and there are plans to open one in Beirut this month. Other cities across the region are in the pipeline. The concept is also a way for small businesses to market themselves. For about one day, GoNabit's website effectively turns into an advert for the small business, many of which do not have their own website or a significant online presence. As people become aware of the deal through a daily e-mail sent to their inbox, they can get their friends to sign up to the deal with Facebook and Twitter notifications to get it to tip early. "For us, it's about having people enjoy the experience and have fun with it," Mr Stuart says. "We write each of the businesses' descriptions and try to make it a bit more dynamic than a regular advert." It also gives consumers a heads-up to a business or service that they normally wouldn't have heard about or come across in passing from a friend. "Summer is a little slow and business goes down," says Nadia Sehweil, the co-owner of Yoga Tree and Soma Pilates."When they came to us, we thought, 'Why not try something new?'" At the end of Yoga Tree's session on GoNabit this month, the business had sold 14 vouchers for unlimited month-long yoga classes after it crossed its imposed limit of 11 earlier in the day. "The way we look at it, it doesn't cover our costs but it's something that we put into our marketing expenditure," Ms Sehweil says. "In the long run, it will cover our costs if you end up with two or three new clients." Mr Stuart will soon have some competition on his hands. Samih Toukan, the chief executive of Jabbar Internet Group, one of the largest e-commerce companies in the Middle East, says he will launch a group buying website by the end of the year. Jabbar, which owns the auction website Souq.com and online shopping club Sukar.com, could prove to be tough competitors but Mr Stuart isn't fazed. "If you can try to focus on good service and good deals while having a bit of fun with it, then I think we'll work out just fine," he says. And for the thousands of UAE residents who have already signed up for a deeply discounted promotion on GoNabit, getting a daily deal is just fine with them. "I think it's going to be really successful," Ms Gibbs says. "You're getting a great bargain. I've begun to tell my friends about it and the word is spreading." firstname.lastname@example.org