Groupon's SA Journey
This is a tale of two entrepreneurs who saw a gap in the local market for an international e-commerce product, made bold moves to fill that gap and are now reaping the rewards
Groupon SA CEOs Daniel Guasco (36) and Wayne Gosling (37) share their inspiring story of the journey that led to them heading up the local branch of this global company.
Groupon is a deal-of-the-day website that operates in 48 countries around the world. The Nasdaq-listed e-commerce company sells products and services online at discounted rates.
Meeting at the London Business School as MBA exchange students, the South African born and bred entrepreneurs knew South Africa could benefit from a product like Groupon.
“Daniel and I met in 2008 as classmates in London. We had seen the success of Groupon in the US and decided to release a similar product in SA,” says Gosling.
When the two returned home to Cape Town, they started Twangoo in June 2010, a clone of Groupon, but specifically advertising local deals. The duo say they funded Twangoo on a shoestring budget.
“We pretty much put the product online. The nature of the business is cash-positive and we didn’t need a lot of money to get started,” says Gosling.
But once Twangoo was launched online and the entrepreneurs saw its growth potential, they decided to get in touch with Groupon founder and former CEO Andrew Mason.
This resulted in Groupon buying out Twangoo in 2011.
The two entrepreneurs convinced Groupon to allow them to run the South African operations and today they are joint CEOs, spearheading the local operation, which has been a great success.
Some of the most popular products on the Groupon South Africa website are spa treatments and restaurant deals offered at a discount.
“E-commerce is experiencing rapid growth in South Africa at the moment and there are huge opportunities in that,” says Guasco.
Gosling adds that because so many people have limited disposable income, when a restaurant deal comes at half price consumers will make use of it. The same goes with the spa treatments.
He adds that although most transactions take place electronically, 20 percent of their customers still pay cash by making a deposit into the company’s bank account.
Connectivity, the logistics of getting products to consumers and avoiding scams are still challenges, admits Guasco.
“What we changed from traditional e-commerce is that we localised products and focused on deals that are under R500. As a customer you’ve probably heard of the restaurant and you trust it. And should a deal go wrong, it’s usually under R500,” Guasco.
And unfortunately, at times deals do go wrong. A company will advertise a deal on the site, but not deliver on their promise to the consumer. There have been instances where consumers with grievances voiced them on media platforms like Talk Radio 702 and Hello Peter.
“We provide huge exposure for any brand. You don’t always control the end service in terms of what is given to the customer and that’s always been a challenge to our business model,” says Guasco.
But they say this has improved significantly over the years. Their partners, the companies who advertise their services on the website, sign an agreement that they will deliver on their promises to consumers.
“But even so, there are people who may take shortcuts. And because we brought the deal to the customer, we are seen as the culprits,” says Guasco.
Groupon has now implemented a checklist for potential clients. They must prove that they have a website, and a good reputation in business among other things. The quality assurance department will also check if they have sufficient capacity to deal with the potential orders.
But even with these checks in place, there could be partners who take chances. And depending on the time frame in which a consumer lodges a complaint, Gosling says they may give the customer Groupon credits to use on another deal or return the customer’s money.
Groupon has resorted to not using a partner that has too many complaints against them since bad service record taints the Groupon brand.