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The success of Groupon paved the way for a number of clones to enter the group buying game, but not all of them have survived.
South Africa’s late entrant to the daily deals space, Zappon, has bitten the dust, joining a string of other small daily deal startups which found the group buying road was not paved with gold.
The startup, owned by South African media company Avusa Media, joined various other Groupon-like deal sites in the country earlier this year.
Its hook was that it joined the game with the backing of Avusa’s various print and online brands.
It seems the strong competition presented in the space — and that fact that a website and a software platform was only part of a complex, low-margin business — was too much for Zappon and Avusa to deal with.
Speaking to Memeburn, group managing director for Avusa Digital, Elan Lohmann admitted that the company made “early mistakes” and that a combination of factors led to the eventual shutdown of the project.
Zappon was taken on by Avusa as a test project and most of the staff were on short-term contracts. During the test phase the media house hoped to “do things better than the other ‘groupons’ out there”. Most of this hope was pinned on the existing Avusa brands and the loyalty of audiences to titles such as the Sunday Times, The Times and Sowetan. This allowed Zappon to take advantage of essentially free print advertising for suppliers featured on Zappon.
“Zappon was an experiment. We couldn’t make as much as we wanted from it and we didn’t get rewards we were looking for. Group buying is a costly space and this was a small project for us. We don’t have the appetite for the space right now,” says Lohmann.
The failure of Zappon doesn’t seem to have deterred the company from the world of group buying.
“The notion of deals be part of the retail landscape for a long time to come,” says Lohmann. “We might revive it [Zappon] again, but in a different way. We have learnt so many lessons.”
The current Zappon staff will be absorbed into other sections of Avusa.
It seems ultimately it was a lack of management focus and a failure to implement ambitious technology that failed Zappon. “We had big ideas and in the end we couldn’t implement the tech the way we wanted,” says Lohmann.
Lohmann seems to think the there is a potential flaw in the current grouping business model and when that is fixed it might be an easier game to survive in: “Whether Groupon will still be around in the future remains to be seen.”