Dubai: Plan B is starting to work just as well for Cobone. With more than 20 players slugging it out in the local group buying space, the company is tweaking its business model to stay ahead of the game.
It has now created individual selling platforms — or verticals — for categories such as fashion, electronics, travel and another for anything that mothers and kids need.
This has helped Cobone apply the same principles of daily deals across a much wider product and services spectrum. In effect, the portal has become a lot more than what it started out with just over 18 months ago.
"Who is to say that the way that the business was started should be the way it should continue? Every business model must evolve," said Paul Kenny, the founder and CEO.
"If we were competing in a single space, yes, it's crowded. That's why we had to get the verticals out."
It seems to be paying off. The electronics portal is churning out transactions of more than $600,000 (Dh2.2 million) a month. The one for fashion has been achieving triple-digit growth rates since the launch.
"The consumer can be approached in different ways with different products every single day — that's why we will need to bring out more verticals," Kenny said. "Daily deals are what we are known for and the aim would be to offer better prices than there are in the market."
But does the heavy discounting directly translate into lower margins for the company?
"Look, certain product lines have considerable margins; fashion, for instance, has margins of 70 per cent," Kenny said.
"What we are giving are better prices than there are at the shops. Now, even consumers who had left to join other group buying sites are coming back to us because they realise they are getting the best deals. We did over 100,000 coupons in December and a dominant share of the money spent in the Mena region on such transactions," he added.
"We feature over 700 promotions a month and that's not even 5 per cent of what's possible in the UAE."
Apart from new verticals, Cobone is also chasing geographies. Operations are up and running in Saudi Arabia and Egypt and a full-scale launch could happen in Lebanon before the year is out.
"The penetration of dining and retail in Saudi Arabia is phenomenal," said Kenny. "But if we had copied the same model in Dubai to Saudi Arabia, it wouldn't have worked. That's why the way we communicated was different, the way the deals are shown is different. For many it was the first time they bought on the internet and we are seeing a high number of repeats."
Cobone got into Egypt just after the political changes brought on by the uprising. It meant that it got in later than was the plan, but the change in timing helped.
"The momentum we got in Egypt was compounded by the fact that the uprising had taken place and a lot of it happened over social media," said Kenny.
"That growing awareness of social media went to help our business. Our focus this year is on building out the operations in Saudi Arabia and Egypt and plan to be in every major city in [the] Mena [region] within the next three years."
Would profits be sighted before that? "We are not that far away from a profit… it could happen this year," the CEO added.
"Our aim is to transform Cobone into more of a discounted e-commerce website and at some point become the largest e-commerce company in the Mena territory."
Self-reliant for this year
Dubai: Cobone may not require any additional financing support to support its expansion this year, according to its chief executive officer.
The company is part of the Jabbar Group and has in the past received funding from the US-based Tiger Group.
"Right now I am OK with the internal fund generation," said Paul Kenny.
"It's easy to assume that our operations can be handled by five to six people behind the scenes. But Cobone has more than 120 people and has all the divisions a normal large-scale business has. When you launch in new markets, you got to have new teams, all of which requires substantial finances."
And what of the competition, especially that presented by the global players with their regional operations?
"I maintain that local players can move faster than international players," said Kenny. "Local knowledge is critical and they cannot execute at the same speed.
"In the United States and Europe, online transactions are in the region of 51 per cent and 40 per cent respectively. Here in the region, it's 6 per cent and Cobone has recorded its growth out of that. The base of online buyers will only grow further and that places us in a very good position."