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Cobone.com: Group buying takes off across the Middle East

Group buying, a concept that went viral in the US in 2010, has now hit the Middle East.

Based on a Chinese collective buying model called Tuángòu, group buying involves accessing highly discounted rates on the promise of bulk purchases – a deal is posted but it is only “on” when a number of people have “bought” the deal.

Once the required number has been met, clients receive a coupon in their email inbox and can use it to obtain the product from the merchant.

In China, the concept started on the internet by connecting people interested in purchasing an item and bringing them together physically to go and haggle with a vendor at a store. In Egypt, group buying is being introduced by the new Middle East group buying site, Cobone.com.

"Cobone" is, yes, what you think it is – a coupon, in Arabic. And cobone.com is a website of coupons, a "deal a day" shopping spot located on the internet.

Already gaining popularity in the UAE and picking up across the Middle East, the site offers merchants a chance at new clients and consumers a 50 to 90 percent off offers from spa days to dinners and helicopter tours to children’s haircuts.

“Group buying is the ideal form of shopping in a weak economy,” explains Ahmed Ayman, a local economic analyst. “It promotes unity and gives consumers opportunities they would otherwise not be able to afford.”

Ayman believes group buying is an important step toward reviving the economy and encouraging people to start spending. But with slashed prices, are merchants making any money?

It seems the guys at cobone.com have it figured out a “win-win” situation, explains Warrick Godfrey, co-founder of Cobone.com. Clients can get great deals but merchants can also make a lot of money off their low-return offerings for the Cobone.com clients. With a little “buzz monitoring,” Godfrey said many cobone.com merchants see peaks in their revenue when they have a deal featured on the site.

Deals on cobone.com are only “on” after a certain number of clients purchase the deal. With numerous payment options, including the Middle East’s equivalent to PayPal, CashU and an option to pay cash on delivery, those interested in the deal need only register and buy. If the item does not make the sales it needs to, the purchase does not go through and clients are not charged.

The risk is similar for merchants. Cobone.com gets a percentage of the revenue from the sale of the item but does not take a fee from the merchant. If the item is not sold, no one loses.

“The opportunity to post a deal on our site is particularly attractive to hotels and new restaurants,” says Godfrey. “It provides them with a number of clients they may otherwise have never reached. If these clients are impressed with the service and the quality of the food or stay, merchants are privy to a huge amount of word-of-mouth marketing.”

Despite a reluctance to shop online in Egypt, Godfrey and Cobone.com Egypt Country Manager Hisham Shwehy are not worried about the success of the site.

“When we started in the UAE two years ago, 80 percent of our site purchases were cash on delivery (COD) because people were apprehensive about putting credit card numbers online,” Godfrey explains. Now the COD purchases are down to 20 percent.

Godfrey and Shwehy expect similar results in Egypt and are prepared for the bulk COD orders.

Godfrey also believes Cobone.com will give a push to Egypt’s tourism, as a new application now being made for the site will allow those outside Egypt to purchase travel deals.

For those with questions, site administrators can answer inquiries placed in the comment section of deals. For the social network-dependant, Cobone.com has credit points for “referrals," purchases made on the site through clicks from links posted on Twitter or Facebook.

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