While group buying can be a money-saving tool for consumers, merchants use it as a marketing engine to generate brand awareness and drive sales.
Business owners who use group-buying platforms are in a way making an investment, as they fork out generous discounts between 50 and 90 per cent, just to create a social buzz. They don't sign up to score revenues on the spot. Merchants are effectively sacrificing current sales to bring new customers through their doors and win repeat business.
Tania Farha, a Lebanese who owns Peekaboo in Dubai, has been in the business for a while. When she heard about the first group-buying platform in the UAE, Farha never wasted a chance to sign up.
Peekaboo operates a few play centres in Dubai. Though she already had a good amount of traffic to her outlets, Farha thought she could use a new marketing strategy to acquire more clients.
"I heard about GoNabit through colleagues and decided to know more about this company. I then met up with them before their launch and I knew then that their business model is perfect for my type of business. Besides, I had nothing to lose since there's no investment upfront," recalls Farha.
Farha offered 15 party packages for a group of 15 kids for Dh475, which was half the normal rate. All the packages were snapped up by GoNabit members, shortly after the site rolled out. Farha says she didn't make the offer for the profit. The end goal was to generate more consumer interest for her business.
"For small businesses, this makes a lot of sense. This is a perfect solution for those who don't have huge advertising budgets. Our aim is to always bring people into the store and we know once they get there, they will come back," she explains.
"The appeal of group buying as a marketing strategy is that it guarantees a certain number of people to enter the store. You have a guaranteed audience. It's sort of direct marketing. Since I sold 15 party packages, I got [225] new potential customers in return. That's how I monetize it," she adds.
Edward Rizk, operations manager for retail division at Intercat, says they did not expect on-the-spot profit when they offered a deal through GoNabit. "We will have a return of this investment later on. I can't say yet how many people come through our doors because of the group-buying platform, but as more people know about this, we will reap the benefits," he tells Gulf News.
Intercat, which runs some restaurant brands, recently offered a GoNabit deal for Burger House at Jumeirah Beach Residence: a Dh120 meal for Dh60. Before the deal closed, 36 people lapped up the deal.
