Mobile is key for Middle East daily-deal retailers

LivingSocial and Cobone launch mobile applications amid tough competition in the daily deals market.

The US retail giant LivingSocial plans to launch its “Instant” mobile-deals service in the region early next year. Jacquelyn Martin / AP Photo

Daily-deal websites are turning to mobile commerce amid rising use of smartphones and fierce competition in the Middle East.

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The US giant LivingSocial plans to launch an "instant" mobile-deals service in the region early next year, while its rival Cobone says 20 per cent of its business could be conducted via smartphone in the future.

Daily-deal sites offer discounts with local businesses such as restaurants, spas and shops, often with a minimum quota of people required to sign up to make the deal active.

Numerous discount sites - including Groupon, the global market leader - have been launched in the region in the past 12 months.

LivingSocial, which was recently valued at US$6 billion (Dh22.04bn), entered the Middle Eastern market this year through the acquisition of the local start-up GoNabit.

Sohrab Jahanbani, the head of sales and operations at LivingSocial Middle East, says the site launched its regional mobile application last month and plans to expand.

LivingSocial's instant service will offerdiscounts depending on customer location, said Mr Jahanbani.

"You'll be in Jumeirah Beach Residence, you'll want to go somewhere for lunch, and then you'll open the app and say 'find me somewhere'," he said. "That's something we hope to be launching soon."

About 29 per cent of consumers in the Emirates have bought goods or services using smartphones, compared with 26 per cent using PCs, according to a recent study by the research firm TNS.

Mr Jahanbani says that the use of mobiles to purchase LivingSocial deals varies across the Middle East.

"We see anywhere between 4 and 12 per cent, depending on the market," he said. "What would surprise you is that in a market like Lebanon, we're seeing more than 10 per cent of our transactions come from iPhones. In the UAE, we're seeing about 5 per cent [via mobile]."

LivingSocial's rival Cobone plans this month to launch an application compatible with phones running on Android software. It recently launched apps for iPhones and iPads.

"Within two-and-a-half weeks we've had 13,000 downloads of the app. It's predominantly Arabic users that are downloading," said Paul Kenny, the founder and chief executive of Cobone.

Mr Kenny said mobile usage was growing among Cobone's customers.

"We've seen a significant increase in traffic month-on-month from mobile," he said. "Three per cent of the first week's users actually bought something through the app. We expect that to grow."

In other markets such as Australia, Mr Kenny said, orders via mobile devices account for 20 per cent of revenue for daily-deal sites. He predicted similar growth in the Gulf.

"Mobile is probably the easiest communication tool that people have here," said Mr Kenny.

Cobone, LivingSocial and Groupon dominate the daily-deals market in the Middle East. Other competitors have emerged over the past 12 months, but Mr Kenny said some of the smaller operators were seeing "a huge decline" in revenue.

"People are just used to buying from the top three, rather than going to the smaller players," he said.

E-commerce is big business globally. According to JPMorgan, global revenue from online shopping should grow to $680bn this year, up 18.9 per cent from last year.

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