LivingSocial announced the acquisition of pan-Arab deals site GoNabit for an undisclosed sum today. It’s good news for regional shoppers–and bad news for rival Groupon, which has been flailing in its attempts to dominate the lucrative Middle Eastern market.
GoNabit, which operates in the United Arab Emirates, Kuwait, Egypt, Lebanon and Jordan, quickly became one of the most popular coupon sites in the region due to a slick Arab-language interface and the opening of aggressive sales offices in several countries. In the past year, GoNabit has embarked on a massive hiring drive while coping with regional difficulties in payment processing caused by poor infrastructure.
Groupon has struggled to establish itself in the Middle East, with sales reportedly significantly lagging behind local competitors such as GoNabit and another popular site, Cobone. Both sites quickly adapted the online coupon business model to the regional market and aggressively approached local companies; by the time Groupon expanded to the region, there was precious little market share to acquire.
Cobone’s name is a humorous exaggeration of how the English word “coupon” is pronounced in Arabic–the Arabic language lacks the letter p.
In an interview with Claire Ferris-Lay of Arabian Business, GoNabit CEO Dan Stuart said that the first plan was to ramp up operations outside of Dubai:
We essentially enter a period of pretty significant growth. They [LivingSocial] have pretty significant resources; they are pretty active and they want to grow their international profile. We have about 40 staff right now, we’ll likely triple our head count by the end of the year […] We’ll have a much larger presence in places like Egypt and in Lebanon but also going to new markets too. One market which we’re in is Egypt… its very much toe in the water [at the moment] so we’re going to make significant investment into that market. […] Saudi Arabia is a place that we’ll look to enter in the short term.
The purchase of GoNabit was part of a major international expansion by LivingSocial announced today which also included the purchase of Ensogo, a major player in the Philippines and Thailand.
For Cobone and other local startups, the news of GoNabit’s acquisition could spur a gold rush. Wealthy American companies are now on the prowl to acquire regional companies–and for Groupon, it might be their best shot for dominance of the Middle Eastern market.