Group buying sites now offer more than cheap meals and manicures.
Following the hype around Google's rejected US$6 billion (Dh22.03bn) offer for Groupon, hundreds of start-ups have emerged in the field, from unashamed copycats to those attempting to offer something different. In the US, there is even a group buying site specialising in cars.
The Middle East has been no stranger to this trend. There are now more than a dozen group buying sites active in the region, with some industry estimates putting the figure closer to 20.
Worldwide, there has been a deluge of "daily deal" sites launching, amid rising equity valuations and untempered interest in start-ups by more established firms.
If that sounds familiar, it is because the "daily deal" craze has several of the hallmarks of the dot-com "boom and bust" story of the late 1990s.
Most of these sites have been around for just a few months, with little brand loyalty among customers, and a business model yet to prove its long-term worth.
This is why investors should approach them with caution.
One of the key arguments made by such sites is they can help a business to attract repeat customers. Yet a recent study by Rice University in the US found only 20 per cent of "daily deal" customers repeat a purchase at the full price. Only 55.5 per cent of businesses that ran discounts via the likes of Groupon reported making money, while 26.6 per cent lost money.
LivingSocial's acquisition of GoNabit is undeniably a positive sign for the Middle East's digital industry. It follows key international deals such as Yahoo's acquisition of Maktoob for $164 million in 2009.
Yet as The National reports today, some say the Middle East market can support only a fraction of the group buying sites that currently exist. Many of them will fail, because there is a limit to the number of discounted meals and manicures - and, of course, cars - that the market can sustain.
