After getting serious bruises across various markets, Groupon has finally exited South Africa.
Groupon South Africa suddenly announced that it will forthwith stop all its operations in the country. Groupon had told its customers on the 4th of November that it was over for the company and everything it stood for in the country.
The company said that “We are sorry to inform you that as of November 4 2016 Groupon has wound down its operations in South Africa and we are unable to offer you any deals today. “Goods purchased up to November 4 will be fulfilled. Should you need to return [an item] you purchased‚ please do such before November 30.”
Well that day has finally come and Groupon has pulled the plug. Groupon will also be pruning its tentacles to 15 countries from the initial 27. The company said it will focus more on North America where its revenue growth has been in the positive.
The challenge with Groupon is multi-faceted. However, one of the major problem with Groupon was that it did not change it business model quickly even when it saw the need to do that. Daily deals was going out of fashion; not just with customers but small businesses who join these deals.
Groupon should have taken the bull by the horn by tweaking its model to a proper marketplace instead of coopting small businesses to do what they are no longer interested in doing
The factors beyond its control should not have hurt the company more than necessary but its inaction to decide its future led the company to rake in huge losses. In the third quarter of this year, Groupon has booked USD35.8 million net loss. The short lived success it enjoyed in daily deals business was greeted by gail of copycat deals sites many of whom typically bought templates going about poaching same set of customers.
In Nigeria. DealDey, a daily deals site also enjoyed some momentary success. However, DealDey was also carried away by the hype. The company had to cut hundreds of jobs, restructured, it could not live on its own and was sold to Ringier and Silvertree for a paltry USD5 million.
Since Ringier and Silvertree bought DealDey, the site has been on the fringes of eCommerce market. The failure of Groupon, DealDey and likely stuttering of eCommerce majors are pointing to one conclusion- technology, GMV, big data analytics should not really be our major concern in eCommerce. It is the people, the environment and the macroeconomics surrounding all of these variables that should determine what direction tech companies take.