Group buying gripes grow

DUBAI: Daily discount deal sites — where everyone is a winner — are dubbed the future of commerce by some.

After all, with up to 90 per cent discount on everything from travel to flowers and massages or hotel rooms, there's a deal to make everybody happy. Or is there?

As many bargain-hunters in Dubai are slowly realising, some deals that sound too good to be true could, in fact, be just that — too good to be true.

Take the case of Heba, a UAE resident, who bought two-way tickets for her father Mohammad and herself in January for an Abu Dhabi-Cairo trip through the Groupon site for Dh1,500 each. The regular fare is double that price. "I was hooked by the promise of huge savings," Heba told XPRESS.

However, when she did not receive any calls or e-mails from Groupon even weeks after she paid with her dad's credit card, she got worried. "For weeks, I tried calling their office in Dubai but no one picked up. We eventually dropped it," said Heba. "The amount was not much, but it was still good money."

Heba's not alone in feeling scammed.

Last year, some people who bought tickets for Ferrari World from group-buying website GoNabit said they were not given prior notice on some conditions. Over 1,000 people bought tickets at 50 per cent discount (Dh225 for two tickets against the original price of Dh450 for two) little realising that two rides were inaccessible. "Had I known about it earlier, I wouldn't have bought the tickets. I wanted to go on a ride, not be taken for a ride," said Nazia Khan, 28, who bought tickets.

Last fortnight, hundreds bought a Musandam trip from Yallabanana.com for Dh149 each, lured by their promotion which said the deal was inclusive of an international lunch buffet. "The buffet was so bad we wanted to throw up. Most of the food remained untouched and we had to eat at a restaurant later," said Sharjah resident Mumtaz, who bought the deal for an eight-member group.

There have even been instances of some deals going woefully wrong. In January last year, a bride-to-be who went in for a beauty treatment at a Dubai salon suffered from second degree burns at the hands of untrained staff after signing up on a Cobone deal that offered a 90 per cent discount for three sessions of laser hair removal.

In other instances, it's been a case of a deal that never was.

For Renuka T., 31, a businesswoman in Dubai, a fishing trip turned out to be a nightmare. On October 19, 2011, she bought a Dh735 Groupon coupon (originally priced at Dh2,800) for a two-hour fishing cruise off Dubai on a luxury yacht. Initially, she planned to use it on October 26, Diwali day, but since no slots were available, she agreed to postpone her trip till the Eid holidays, then Christmas, then New Year.

Renuka thought she could finally use it to give her husband a birthday treat on January 23, 2012 — but there was still no slot available. She finally decided to ask for a refund, but even that did not help. "They don't pick their mobiles, and landlines are just ringing. When I went on their FB page, I saw so many people disgruntled with their offers."

On April 15 Groupon promised to respond in three days about this case. We are still waiting. Dubai-resident Loulou faced a similar ordeal after buying a coupon deal in February for a keratin treatment at a salon she'd been to before. When she arrived at the salon and asked for specific brand, she got evasive answers. "After five minutes they turned up with a bottle of a completely different brand that would have had a very different effect on my hair, so I refused." She then said she would wait for the salon to giver her the right treatment. "They never did and even though they asked Cobone to refund me, that was two months ago and I still haven't got my Dh495 back."

TIGHTER REGULATIONS

Incidents such as these have triggered a clamour for tighter regulations. XPRESS found over 20 group-buying sites in the UAE.

Of the 20 or so we asked for answers, only four — Nailthedeal, Cobone, LivingSocial/GoNabit and dealgobbler — replied.

As a largely self-regulating industry, savvy web marketers have been prone to using untruthful advertising and this has led to a number of disgruntled customers.

Already, a floodtide of complaints over delayed deliveries has seen two Groupon Middle East chief executives come and go in the past year.

Like any business, the devil is in the detail and not all customers read the fine print. With coupon deals, refund is a major issue and customers are only able to discriminate after taking the risk first.

One site's refund policy states: "Our vouchers are non-refundable. It is your responsibility to check if you really want to buy the voucher. It is also your responsibility to check the validity terms and use the voucher before it expires… we are not responsible for the quality of the service provided by the merchant or experience itself."

Dr Ali Bhayani, faculty of Heriot-Watt University Dubai and a strategic marketing and brand management expert attributed the customer dissatisfaction to the poor record of group buying sites in explaining the terms and conditions on these deals.

However, while there have been complaints, it's not all bad news.

Online discount deals do have their benefits. Cobone claims they helped customers in the Middle East save over $43 million (Dh158 million) since its launch. "With the growth in this segment and the increase in trust from customers, it is set to boom and become even bigger than it already is," said Paul Kenny, Dubai-based CEO of Cobone Middle East.

CROWD-PULLER

There's no doubting discount coupons' crowd-pulling power.

Banyan Tree Hotel in Ras Al Khaimah has sold over $1.1 million of room nights in 14 days through 50 per cent discount through Living Social, which acquired the Arabic coupon site GoNabit.

While all companies follow certain guidelines and laws of the local market, Kenny agrees that the industry needs better regulations. "The industry may have more regulations and laws imposed on it with time."

Alex Hojilla, chief operating officer of dealgobbler, welcomed tighter industry regulations, adding: "It will help us in building a credible industry and prevent group buying having a bad reputation that we unfortunately have to struggle with sometimes in convincing customers and merchants alike."

Tareq Ellahi, co-founder and chief operating officer of nailthedeal, said overcrowding of the sector is one of the main reasons for the spate of complaints. He reckons the market can probably hold up to five players. "There's no doubt that the arena is getting overcrowded," said Ellahi who claimed only three per cent of their sales result in complaints. He said that 92 per cent of the complaints are solved within 24 hours.

Heightened competition means some sites may sign up new deals without checking. "This requires companies to be on their toes — daily deals, quick processing, feedback and response — all need to be executed to build trust," said Dr Melodena Stephens Balakrishnan, faculty of business and management at University of Wollongong Dubai.

Customers rant, she said, because they are scared their expectation will not be met. "The process in itself is new so it's important for companies to educate customers on what to expect.

"Once these comments are in print, you can't easily erase them … a company needs to work harder to collect stories from satisfied customers. Word-of-mouth is still more powerful than online comments. So a company must go out of the way to create positive stories — especially in its early days when the concept is catching on. This means spending money. If you don't put money in, you are not going to make money."

Sustaining it all the way

While launching a coupon website is easy, sustaining it is not. "People like to state that this is an easy model to start. [But] what's not easy is scaling," said Dan Stuart, Managing Director, LivingSocial Middle East, which boughtGoNabit last year.

"Now that there's too much (discount sites), we've decided to step back," said Ishwar Chugani, the executive director of ETA-Star Retail Group, which first offered discounts two years ago to promote its new restaurants. "I don't think it's a healthy thing… you cannot do it [give huge discounts] often. One has to build up one's customer base and [then] work with them directly."

Given the issues, some companies have taken a different route. Instead of offering online discount coupons, global apparel firm Giordano has launched its own online store and runs a loyalty programme for its 300,000 members in the Middle East.

COUNTER-TREND

Given the number of complaints against such sites, a counter-trend is also emerging: the rise of consumer vigilantism.

And social media have been at the forefront in this movement.

Blogs, online forums and Facebook have allowed irate customers to vent their angst and tell others about it.

In this wild west of online commerce, it's the consumers who ultimately pay for lack of attention to detail. Enjoying life for less is not as easy as one would think.