Groupon eyes six new regional offices

Groupon Middle East plans to open up to six offices in the GCC as the world’s largest online daily deals provider looks for new ways to build market share, its CEO has said.

The firm, which will open an office in Oman, Bahrain, Qatar, Kuwait and several in Saudi Arabia, expects the group buying market in the UAE to further consolidate as it reaches saturation point, said Alexander Kappes.

“Right now we are looking at the region. The markets that are most interesting right now are the GCC markets like Qatar, Bahrain and Saudi Arabia.

“Kuwait and Qatar have been showing very strong GDP growth over the past couple of years and due to the size of them – they have a large expat community – it’s an interesting market because you can go in there and start business very quickly,” he said, declining to give a timeframe. 

“We want to do the whole market at once. In Saudi Arabia you need to scale the company and business very quickly… we would be looking at least one head office or two head offices,” he added.

Groupon shares have lost around three-quarters of their value since the firm made its debut on the NASDAQ in November.

The company once hailed as the fastest growing internet firm ever reported a 45 percent increase in global revenues in the second quarter but missed analysts’ expectations by US$5m. Shares hit a record low of US$4 on September 4.

The decline has led to questions being raised about the sustainability of the daily deals business model. Chief financial officer Jason Child earlier in the month said the company is taking steps to help drive its growth in Europe.

The website will introduce technology that enables the website to send more relevant deals to its subscribers in Europe, said Child. “It's one of the primary drivers we expect to see in the back half of this year,” he said.

“That should be one of the solutions for helping us to drive growth in the future,” he added.

Several daily deals websites have closed down operations in the Middle East amid increased competition. Groupon’s Washington-based rival LivingSocial in August said it had closed down its operations in the region as it moves to concentrate on opportunities in other regions.

Groupon Middle East is making a profit but expects more than half of its rivals to close down their operations in the near future, said Kappes. “I expect a strong consolidation in the market,” he said.

“Right [now] we are looking at around 27-30 businesses in the market... I think a good number would be about five businesses if you are looking at businesses that can cater to different needs,” he added.