Expanding a Tested Model at E-coupon Site Cobone
By serving up an irresistible deal every day from leading retailers and high-class restaurants, Cobone is enticing new e-commerce customers across the Emirates
In the ever-expanding world of online retail, the e-coupon business is fast becoming the model to mimic. The premise is a simple one: a site offers huge discounts on goods and services from retailers keen to promote their businesses to a vast online community. The deals are only triggered when a set number of sales have been reached, guaranteeing a minimum footfall, while the site profits by taking a cut of each transaction.
Groupon, the leading e-coupon site in the US with operations also encompassing Europe, Asia, and South America, has ably demonstrated its potential. With revenues exceeding $50 million a month, it was reportedly the subject of a $2.5 billion takeover bid by Google in November.
Cobone.com, launched by Jabbar Media Group this August, is one of the leading exponents of the model in the Middle East. With daily discounts on services from swanky dinners to yacht rentals in Dubai, Cobone serves the growing UAE e-commerce market – one now valued at $36 billion – with offers it seemingly can’t refuse. Its success has been swift, with one of its cinema offers resulting in the sale of 2,400 coupons in just 15 hours.
Myriad similar sites have now sprouted, including Bayt.com’s GoNabit, which launched in Dubai in June 2009, but Cobone is unique in offering cash-on-delivery payment. Guiding the company’s evolution is CEO Paul Kenny, whose family helped Irish bookstore Kenny’s become one of the world’s first online book retailers. Here, he offers Wamda his insights into e-commerce and entrepreneurship in the region.
What, if any, lessons from Kenny's transition to e-commerce did you apply when you started Cobone.com?
Paul Kenny: When we launched Kenny’s in the early 90s, we faced many challenges, including getting users to pay online, gaining trust in a market that was only starting to use the internet, and building our brand in new markets. That, added to my regional experience working with Jumeirah Group, MEED, AMEinfo.com and Emirates Group, has all been extremely useful in developing Cobone.com.
When did the idea for Cobone begin to take root?
PK: Having been in Dubai for three years, I could see there were huge opportunities for online ventures, and telecom companies Du and Etisalat were already facilitating regular online payments through DEWA. Working in the hospitality industry, I knew that restaurants and companies in Dubai are constantly look for new customers, and after seeing the success of Groupon in the United States, I proposed the idea for Cobone to Samih Toukan, CEO of Jabbar Internet Group. We were both very excited about bringing the concept to the region.
Can you briefly describe how Cobone.com works?
PK: Cobone.com features one deal a day, with discounts ranging between 50 to 90 per cent, on the best experiences, restaurants and things to do in Dubai, from cinema discounts to yacht rentals and parasailing. Once you purchase a coupon, using a credit card, PayPal, CashU or Cash on Delivery, the coupon functions like cash at the given venue.
How did you first entice restaurants and retailers to join Cobone?
PK: We found that many businesses didn’t have a website and thus no online exposure, while others were simply finding it hard to attract sufficient customers. So we offered Cobone as a solution to both issues. Since we agree on the number of customers needed for a given deal to go through, businesses can reduce their risk by using Cobone. The numbers speak to our success: we now have over 50 companies waiting to get onto our site.
You have a direct competitor in GoNabit.com, so what steps have you taken to differentiate yourself?
PK: Having competition in the market is never a bad thing, and there is definitely room in the region for more than one player. What Cobone brings to the region is international experience, as we have successfully opened the same business model in India, Switzerland, Mexico, Argentina, Chile, New Zealand, Australia, Turkey and Germany. It’s obviously working; we’ve just experienced two of the most successful e-commerce days in the history of the region, with a cinema deal selling almost 2,500 coupons in 15 hours and our Vapiano deal selling 1,600 coupons in 14 hours.
How do you see the e-commerce market, which is still nascent in the region, evolving in the Middle East over the next few years?
PK: I see e-commerce growing at a phenomenal rate. More and more people are now paying for goods and experiences online, as evidenced by our own success, and in the coming years I see online sales outpacing offline retail sales.
What are the main lessons about entrepreneurship you have learned over the years?
PK: Surrounding yourself with the right people is key, and it’s the element that has shaped my journey the most. I also advise having a mentor who can help guide you through your journey in business – but I do believe that you should ultimately trust your gut feeling. I am also always surprised with how much can be achieved with dedication and hard work.
What five pieces of advice would offer an aspiring entrepreneur?
PK: I say the following:
1. Never accept the standard rate – everything in life can be negotiated.
2. Surround yourself with the right people – hire the best.
3. Never believe your own PR – a good friend told me this. The day you start believing your own PR is the day your competitor beats you.
4. Focus on the business plan – it is your bible for running a business and must also be adapted as the market changes.
5. Listen to your customers – they will always tell you honestly how good of a job you are doing.