Despite the closer of Groupon in South Africa savvy entrepreneurs should capitalise the market gap left by Groupon’s closure. The business model has drawn criticism. Its aim is to “redefine how small businesses attract and retain customers”‚ by offering online discounted deals. Merchants have complained that deals are often not profitable‚ and that they attract the wrong kind of customer‚ many of whom do not become repeat customers after the discounted deal‚ and do not spend money beyond what they’ve paid for the coupon.
Groupon is a group-based social e-commerce buying service they have been going for about a year and making a huge impact on local business. Groupon experienced exponential growth in the coupon concept when started out, the last financial quarter showed a net loss as their business model took strain.
Web-sites like Groupon were the pioneers in this new concept in retail marketing. End users sign up, and each day they get a coupon for a discount normally at 50% off the normal price, the deals focus on local business: from hair salons to health and beauty outlets to dog training lessons. This online phenomenon has sparked marketers to clone the Groupon concept and come up with a different take on the coupon deal making concept. The South African eCommerce has a value of between R6-7 billion, the eCommerce sector in South Africa is growing at a rate of more than 25% per year.
“With the right marketing techniques, support and operational strategies, small eCommerce website can compete with big brands to stay relevant and get a slice of the pie,” said Nick Maritz from webs.co.za a professional e commerce development company “ The business opportunity for entrepreneurs would be to enter the market with a self owned “local deal website”