Groupon Getting Pummeled Daily in the Israeli Deal Market, BUY2 Leads

Grouper, Groupon, Buy2, Bigdeals, yad2, baligamBy Benjamin Bakhshi

Daily deal sites like have taken root in cities all over Israel, with over 80 currently running deals.  Back in January 2011, Groupon bought out, Israel’s first to market daily deal site for an estimated $8-15 million US dollars.  On August 3rd, 2011, BUY2 bought out competitor Deal Hayom for 2 million shekels ($568,000, 08/06/11, Hebrew article). BUY2 is Israel’s largest daily deal site based on total Facebook friends and average revenue per deal.  According to daily deal aggregator site, BUY2 has a 17% Israeli coupon market share, and Deal Hayom has 7%.

According to the Talniri report, BUY2 will continue to operate Deal Hayom as an independent brand “with the understanding that the site is a recognized brand and has a crowd of visitors that is wide and loyal.”  Deal Hayom was founded in July 2010 by Dr. Eyal Felstaine, Shai Amir, Shlomi Sholetz, and Emilian Sholetz.  Deal Hayom means Today’s Deal in Hebrew. It seems like BUY2 has a better game plan when it comes to the Israeli market, and there are no signs of them slowing down.  BUY2 is owned by Netex and Mako, which are part of the Keshet Media Group, one of Israel’s largest media companies. Israeli business news network Globes, on July 27, 2011, reported that Groupon Israel has made a formal complaint against Mako for unfairly preferring BUY2 advertisements on their website.  Mako insists that “BUY2 buys advertisements just like any other competitor, including Grouper (ie. Groupon Israel).” It seems like Groupon is jealous of BUY2’s success in the Israeli market.  Let’s see if the courts decide to rule against BUY2 in this case.  Groupon would be better off looking at their marketing strategy in the country rather than attacking the leader.  The chart below might reveal why Groupon is falling behind in the marketplace., and BUY2 is succeeding. Here is some data from August 6, 2011: Israeli deal site   Facebook Friends    # of Sales    Cost        Revenue (in NIS)                    99,635                       207        NIS 1036      214,452.00              43,645                       77           NIS 890       68,530.00          35,612                      295         NIS 69          20,355.00               28,482                     1052       NIS 15          15,780.00              24,315                       486        NIS 249       121,014.00                18,256                       1112        NIS 149        165,688.00

With double the number of Facebook friends, and probably an even larger e-mail database, BUY2 tripled Groupon’s revenue for the day.  I have just checked today’s deal, for August 13, 2011, BUY2 made a revenue of ? 90,000, and made a palsy ? 2350 .  Groupon is a consistent slacker in the market.  It seems like their Facebook friend list is mainly due to their brand name recognition and not the quality of deals they are running. 100,000 Facebook friends in Israel is equivalent to over 5,000,000 Facebook friends in America. A major aspect of the Israeli daily deal space are the daily deal aggregators.  These are sites that show you put all the daily deals in one place, and make an affiliate commission for referring customers., and are amongst the largest around.  Most savvy users have these sites bookmarked and will go directly to the aggregators before viewing individual deal sites.

Finally, I want to make a special mention of, an Israeli video marketing company that markets to the USA, France, England, Germany and Southeast Asia.  They recently signed a deal with Cliqa, one of the Israeli daily deal aggregators listed above.  Cliqa will now be automatically making videos of selected daily deals using Treepodia’s technology.  With aggregation business so close to commodization, video clips may be what they need to stand out.  “The whole area of daily deals and group buying, which has grown and developed drastically in Israel during the last year, is filled with rivalry between the different competitors in the market. The service offered by Cliqa together with Treepodia of video clips describing daily deals and transforming information to an interactive experience, is a unique service which does not exist in this area in Israel nor in the global market, “ says Cliqa owner Oded Barel.

* Ben Bakhshi is an Israeli citizen born in California. He has a degree in Business Economics from UCSB and serves in the IDF Air Force.

Eze Vidra

Eze is startup investor and advisor. Until recently he was a General Partner at Google Ventures Europe. Before joining GV, Eze started Campus London, Google's first physical hub for startups, and led Google for Entrepreneurs in Europe. He's an experienced product manager and startup mentor. In 2012 Eze founded Techbikers, a non-for profit supporting children education in developing countries.

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