Paul Kenny interview: Cobone

Cobone is storming the field of group-buying websites. But with the market becoming increasingly crowded, founder Paul Kenny is changing its focus
Paul Kenny interview: Cobone
By Sara Anabtawi
Sun 27 May 2012 08:32 AM

Paul Kenny is a busy man. His group buying website Cobone is racking up $600,000 worth of transactions per month in the electronics vertical alone, with more than 700 promotions on offer. You want a cheap deal? You want it quick and easy? Cobone is just one of 20 players in an increasingly crowded market, but right now, appears to be leading the way.

“I want Cobone to become the largest e-commerce site in the MENA region, and we are very close to doing that. I see Cobone as a one destination to buy anything at a better price than what it is in the market,” says the 28-year-old founder of the company.

The evidence suggests he may just do that, and one day provide a massive windfall for his backers, the Jordanian-based Jabber Internet Group. The company was only launched in July 2010, and within a year had more than 300 businesses on a waiting list to join Cobone, with 750,000 subscribers and 350,000 Facebook fans.

Earlier this year it managed its biggest-ever single deal, when $234,500 was spent in one day for a yacht cruise package. When Cobone ran a deal with Madinat Jumeirah for its Al Qasr brunch, it sold 1,765 coupons in twelve hours generating $100,000. According to Kenny, it was the most amount of money that the Jumeirah Group has ever made on food and beverages in such a short timeframe.

How long the fun will last is another matter. Kenny knows only too well that his group-buying site is placed in a region saturated with similar businesses, his company has wisely started fishing for alternatives.

“We are going to move the company to become a discounted e-commerce site,” says Kenny, adding: “so, you are not going to recognise us primarily as competition to other group-buying sites like Groupon and LivingSocial. Cobone will be its own entity.

“The difference is, unlike daily-deals, the products are permanently there. Instead of having the customers go on the site and look for available deals, they will be able to search for, let’s say, an iPad, and it will be listed there,” he says.

Cobone has recently launched its electronic storefront, for instance, where customers can enjoy best prices on listed Apple products, Samsung items, BlackBerrys, and even electronics accessories.

With Kenny’s tweaks, the new model will feature thousands of discounted items at more affordable prices than large electronics retailers such as Sharaf DG and Jumbo Electronics.

Other selling platforms — verticals or storefronts — include categories such as fashion, travel and anything that relates to the needs of mothers and their children.

“What I would describe as e-commerce is: if you want anything, you will always get the best price off Cobone. The customer will come to us and that is where the best price will be — not shopping malls,” he explains.

Cobone will keep daily deals, but the storefront model is part of a bid to make the site larger and more user-efficient: “We are completely redeveloping [the site]. Customers are going to see great stuff in the next two quarters,” he says.

Cobone is also growing in the region, operating in the UAE, and more recently in Saudi Arabia and Egypt: “We plan to launch in every country in the Middle East and Africa.”

But, what seems to be halting Kenny?

Shifting into new markets is no easy task. In fact, Kenny believes that with every new move comes a new tweak in the model, and that requires maximised studies.

“Not every country in the region is ready for an e-commerce site. We are looking at investing into countries with long-term growth,” he says, adding: “What we realised is: you cannot copy what you do in Dubai, to what you do in Sharjah, and what you do in Sharjah, cannot be copied to what you do in Riyadh, and so on.

“Our approach is completely different in every single country. The way we communicate with customers is very different from place to place, the language we use, the Arabic dialect, the visuals, the deals, the people we hire, everything is different. What we realised is, we cannot copy,” he says.

Saudi Arabia is a great example to look into, as the conservative kingdom is far from similar to the ways of the UAE.

“[In Saudi], we needed to cater to the local population. First of all, the population there does not have as many facilities as a place like the UAE — no yachts, no cinemas, no banana boats. So, from a deal-sourcing perspective, it was all about the food and spas,” says Kenny.

More or less, the same structure is applied in both cities, but Kenny says that a completely different profile of people works best for Saudi.

“While [in the UAE], you can hire young people who are interested in learning about the internet, in Saudi, I cannot send a young person to a meeting,” he says, adding: “You need to send a very senior sales executive who is very respected in the region because the young guy will be told to get out.”

The conservative way of the kingdom aside, Kenny is looking further into the region and highlights Cobone’s leap into Egypt.

“I think Egypt will be one of our biggest markets in the next two years. We are looking forward to it stabilising, as it is still quite unstable, but when there is a president in place, the market will begin to grow in time,” he says.

Despite getting into Egypt just after the tumultuous political changes of the uprising, the timing has helped.

“Pre-Arab Spring, people were not using the internet, but now there is awareness about it, people trust it. Facebook was one of the key drivers of the revolution… so there is a huge internet adoption rate,” says Kenny, adding: “As a population with around 80 million people, I think it will be one of the biggest internet markets there is.”

Regardless of where Cobone is situated, Kenny adopts a uniform approach when dealing with his company’s potential partners; whether it is a restaurant, a spa, or a water park, among others.

And that is to ensure that all partners can sustain the amount of customers brought in by Kenny’s team.

“In a very basic sense, we would work out what [our partners’] current capacity is, and see where there is excess capacity. In turn, we will sell that excess capacity,” says Kenny.

“When we approach a business, let us say a restaurant, we ask them how many seats they have on location and how many customers they receive per day,” says Kenny, adding: “What we do is, we introduce cap deals. We work closely with partners because the last thing a customer wants is no availability.”

Kenny stresses that cap deals are important as there is absolutely no point in flooding a business — that only breeds displeased customers and discontented partners.

“Some businesses, like Ski Dubai, do not need a cap. They can take thousands of people per day,” he says, adding: “For them, it is fine, Wild Wadi too, but with certain businesses, you need to work with a cap.”

A year and a half ago, companies were a bit hesitant to go down this road, but now they are looking at Cobone to market their brands: “They all use Cobone as a way to fill in their excess capacity.”

In fact, Cobone’s growth over the past year has been quite progressive. As a result, a large number of partners have been attracted to flock through the company’s doors.

“For the first quarter of this year, we have grown from 30 percent to 50 percent every month, and we expect that to carry through till the end of the year,” he says.

At this rate, Kenny’s Jordanian investors will have a lot to smile about by the end of the year.

For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.