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‘Group buy’ sites still limited to the largest African markets

July 25, 2011  »  Business6 Comments

Updated 3/2/13 with Pennysaver.co.ke. Updated 12/10/11 with news of closures of Dealify and Zappon in South Africa. Updated 11/19/11 with site from Zimbabwe. Updated: 9/25/11 with sites from Ghana, Morocco, Réunion, SA, and Tunisia. The South African and Kenyan markets are very near saturation. Encouraging is the appearance of sites in Ghana and even Réunion.

A few months ago, group buying sites (a la Groupon) appeared in South Africa and Kenya. Now, such businesses can be found in at least eight African nations. However, smaller competitors are struggled to survive in competitive marketplaces such as South Africa. Two daily deal sites in South Africa were shut-down in late-2011.

Egypt:

  • Two as of May 2011 (Cobonak and offerna), plus a few regional sites, per Arab Crunch.

Ghana:

  • Two as of September 2011. UgoDeal began in August 2011 and covers Accra, Cape Coast, Kumasi, Sekondi-Takokradi, and Tamale. Teerfo began in late July 2011 but does not show deals at the moment.

Kenya:

  • At least 6 as of June 2011 (Repu, Zetu, Sokoal, MyShillings, Zebumob, Group Buy Kenya). Bandwidth Blog has them listed.
  • There’s another one in Kenya, Penny Saver, that offers door-to-door shipping and has some unique items including consumer electronics, toys, cool items, fashion, beauty and more, not to mention also offers deals on services like all the others.

Morocco:

  • At least 6 as of September 2011 (Buzzdealing, Getdil, HmiZate, Marocdeal, myDeal.ma, Superdeal). From DailyDealGame.

Nigeria:

  • 2 dominant sites (QluQlu and DealDey), Web Trends Nigeria wrote about them in June 2011.
  • 3 newcomers (All4Naija, GoodNews, Wazobia Deals), DailyDealGame has them listed.

Réunion:

  • 1 group buying site (Happyrun). Has over 1,000 Facebook fans.

South Africa:

  • 35+ sites, iGeek (and the comments on the post) has many covered.
  • The Facebook Page ‘Group Buying South Africa‘ monitors daily deals sites as well.
  • New as of September 2011, DealScout is a daily deals aggregator that provides a customized list of daily deals from the top South African players.

Tunisia:

  • 3 sites with substantial followings (Afariet, Chtarsoum, Dealoo.tn), per DailyDealGame

Zimbabwe:

  • Dhiri, launched by Melbourne and Harare-based C2 Media, offers daily deals for Harare

Plenty of questions remain whether the group buy model will work in Africa. Or, even if it can function, is it necessary?

The main challenge is simply market size. Most African nations do not have enough middle class consumers to provide sales volume to allow business to offer highly discounted deals in the first place. On top of that, under the typical business model, consumers must utilize e-commerce to purchase the deal. What to do when smartphones, Internet connections, and online payment systems don’t yet exist?

Perhaps a web platform isn’t even needed. SMS could be a viable option. Say the deal business sends a daily blast to subscribers. If enough people respond, the company enables the deal and sends a confirmation text asking for payment. The hitch here is payment – its flow for both consumers and merchants really is a key to successful group buying. In most group buy models, the consumer buys the deal upfront. The consumers pay the middleman, who then gives much of the proceeds to the merchant. However, if mobile payment systems aren’t widely used, how can the group buy business (the middleman) get paid by consumers so that it, in turn, can provide the merchant his fair share once all is said and done? In a strictly cash society, the procedure would be reversed. The consumer would purchase the right to the deal and pay the merchant the discounted rate at the time of use. Then, the merchant would be responsible for paying the group buy business its share of the revenue. In this case, the merchant would be better off running the group buy on his or her own.

Which African nation will be next to add a group/collective buying site to its online repertoire? Morocco and Tunisia certainly have enough Internet users to support such businesses. In Sub-Saharan Africa, Ghana, Tanzania, Zimbabwe, or Cameroon seem likely to produce at least one group buy site within the next couple of months. User-interaction and mobile strategy will matter. In addition, it is unclear what percentage discount will be needed  to attract enough sales volume (50-90% is standard for Groupon in the United States). The rise of social media and m-banking will certainly help fuel these sites.

One caveat to entrepreneurs and developers for when the time comes: don’t copy Twangoo or Groupon. Be innovative.

  • Scholli

    It seems that someone openend a group-buying site in Ghana since your you posted this: http://www.ugodeal.com
    Also, there seem to be 2 more sites that openend in Nigeria as well. Curious to see how quickly this will become a crowded market yet again…

  • DealScout

    We’ve just launched a new South African daily deal aggregator called DealScout(http://www.dealscout.co.za).   Please could I ask you to add us to the list above.   We have comprehensive filtering functionality, a .mobi site and feature a number of SA’s top group buying websites.

  • http://www.oafrica.com oAfrica

    Hi DealScout! I’ve added you (and am following you on Twitter). Smart move to provide a custom feed for users. Certainly saves time and limits the clutter – I’m amazed (but pleased) at how many daily deal type sites exist in South Africa.

  • PennySaver

    There’s another one in Kenya http://www.pennysaver.co.ke and its different, offering door-to-door shipping and has some unique items including consumer electronics, toys, cool items, fashion, beauty and more, not to mention also offers deals on services like all the others.

  • http://www.oafrica.com oAfrica

    Thanks – added!

  • mandy

    plz dont forget http://www.ocaziondeals.com ..this is one of my favorite daily deals web sites