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US bouquet for Twangoo

Jul 22 2011 10:53 Nelisiwe Tshabalala

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TWO SA entrepreneurs were paid the highest compliment when their social buying site Twangoo was bought by Groupon USA - the very model it had been copied from.

It all started when Wayne Gosling and Daniel Guasco saw an opportunity and pounced on it by forming Twangoo, a social buying site that was a replica of the already successful US site Groupon. It was a hit, being the first of its kind in South Africa.

The concept behind Twangoo is to offer discounted deals on goods, services and activities such as restaurant meals and sight-seeing people can enjoy in their city.

The company performed well and far exceeded expectations. But because of the market's low entry barriers, Gosling and Guasco realised they needed an edge over their competitors to remain head and shoulders above the rest.

After months of trying to find a buyer for their company, the duo caught the attention of a big investor - Groupon USA. 

In January 2011 Groupon bought Twangoo, and the two entrepreneurs took the reins of the South African subsidiary of the global social buying phenomenon.

After only six months in existence, Groupon is the biggest social buying site in the country and one of the most visited websites in SA.

Says joint group CEO Gosling: "Groupon has been fantastically received."

Amazingly, in such a short period of time there have been 6 000 to 15 000 sales on certain deals.

Groupon has built its enormous success on the fact that it is both a marketing tool for businesses and a lifestyle platform that offers people fun things to do and buy in their cities. But the catch is that each offering expires in a 24-hour period, so it forces people to buy impulsively for fear of missing out on the deal.

However, many people in this country have limited access to the internet - which Gosling concedes remains a big challenge for Groupon. It doesn't help either that South Africans are generally not known as a nation of online shoppers.

But Gosling says the company is working on ways people can make purchases via debit cards and other secure methods. He adds that Groupon has security structures in place to keep confidential details safe from internet fraud.

He remains enthusiastic about SA's internet prospects and sees things getting better. Lack of internet access is something Groupon hopes to overcome by focusing more on pulling in mobile users in the near future - an idea it is keeping under wraps.

While customers have flocked to Groupon, the businesses being marketed are equally happy, he says. "Niney-five percent of the companies want to run again. It gives them the marketing clout of big corporations such as Coca-Cola. It gives small restaurants the kind of exposure they would never have in existing marketing channels," says Gosling.

So how does Groupon make money? There are no upfront advertising costs; instead, the company takes a 50% commission on deals sold. However, the industry is still in its infancy and shoppers as well as businesses need convincing before they are completely hooked.

And if you are hoping for a Groupon in a city near you, fear not. The company is working on launching in Nelspruit and Soweto soon, while its focus remains on promoting national deals. Particular attention is given to deals on franchises, which Gosling says is the comany's primary focus.

If you still have doubts about the quality of products offered on Groupon, the company has a dedicated quality assurance team that follows a stringent checklist to make sure deals measure up to certain standards.

And Gosling believes social buying is not a novelty that will eventually wear off in a fast-changing online landscape. He says: "We always love a good deal, people will always come on (board). Everyone loves a bargain, regardless of how wealthy they are."

For now, though, team Groupon is focused on reaching targets they have set themselves and making Groupon a sustainable company.

"We want to make it a self-sufficient company in the long term, even long after myself and Dan have left. We want to be the number one e-commerce platform in SA," says Gosling.

Gosling urges budding entrepreneurs to "keep on keeping on", and to chase down every ally to make their dreams come true.

 - Fin24
groupon  |  entrepreneurship
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