Pop! Goes the Groupon Bubble

Pop! Goes the Groupon Bubble

With Groupon shares dropping to $20, Kipp can’t help but speculate a similar fate for the UAE’s avid group buying market.

November 23, 2011 4:58 by Eva Fernandes

Just a day after heralding Groupon’s founder for his slightly excessive application of bronzer, it would appear the bubble surrounding the darling of the internet, Groupon, has finally burst.

Pop! In the words of the New York Times, “that was fast!”

Shares of Groupon dropped for a second day, falling as much as 19 percent—going for $20.03 during morning trading.

That we’ve said Groupon has been grossly overvalued is nothing new, but with the beginnings of a mighty POP underway, Kipp can’t help but consider the future of the UAE’s relatively younger but certainly over serviced group buying sector.

It was news of a new blackberry-specific-group buying agency, BBM Baby, that spurred Kipp on to compile a list of those aboard the Group-buying bandwagon. With Moosavings, YallaBanana and BBM Baby on the list, just two months later it seems a tad irrelevant. We should add Nailthedeal, Cobonza, Justhenga to the global list of group buying companies…oh lest we not forget the launch of the most recent site: Grosper—a group buying site that offers discounts on property rentals and other home-related services (I know we are supposed to be complaining about the site, but given the rents in Dubai even Kipp will admit it is a pretty neat idea). Grosper launched just a week ago, but you still need an invitation to get into the website.

Nonetheless, you get our drift. The group buying fever exploded last year and since then has been inundated with more competitors than we can count on our hands, we can’t help but wonder for how much longer will this continue? When will the bubble burst?

Perhaps GoNabit founder Dan Stuart sold the company to Living Social just at the right time—the height of group-buying popularity in the region. What’s that they say about the early bird?

Come to think of it, we wonder how many hits GoNabit receives now that it’s changed its name to LivingSocial. Have you or anyone you know bought a deal from the company since it turned into LivingSocial? Tell us about it! Leave a comment here or send an email to editor@kippreport.com

Tags: group buying, group buying dubai, group buying dubi IPO

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4 Comments

Justhenga on November 23, 2011 5:36 pm

Please remove our company Justhenga from your misinformed list. We can assure you we have not gone bust or popped… In fact we haven’t even launched in the UAE as yet.

Thank you
Jake on November 24, 2011 7:30 am

Grosper didn’t launch. The founder was on dubai eye last week discussing the postponement of the launch for another 6 months. Can they pull it off?
Akram Raffoul on November 24, 2011 9:08 am

It was about time group buying broke loose after several years of attempting to succeed in the corporate market segment.
However, while there is an apparent, and perhaps lasting upside to this epidemic (delighted many bargain-seekers in a climate ruled by austerity), the downsides are that it has turned many consumers into opportune individuals, looking at price first, above delight and delivery, and providing a vendor short-lived sales gains. it also represents a major threat to service levels and vendor workers’ motivation. Let alone making consumers believe that paying full price again is equivalent to being robbed.
In summary, we are at risk of eradicating the essence of marketing practice that is to generate a profit margin and customer loyalty on the premise of a sustained (not just a one-off) delightful value addition.
Bon appetit to the buyers! As for vendors, stock-up the anxiolytics!
Twinkle on November 24, 2011 9:28 am

Justhenga, the article isn’t saying you’ve gone bust, it was just listing global group-buying companies (and giving you some free publicity!). Read it again!