Worldwide Group-buying Craze Hits Israeli Anglos

Israel's Anglophones have long banded together, whether it be for community support or housing, but now they are getting together for a more utilitarian purpose, group-bought deals.

But don't think this is one big happy family. In recent weeks a diffuse group of more than 30 different websites, many of them in English, Anglo-owned or Anglo-centric, have sprung up here offering deep discounts for a number of products and services, raising questions of whether there is room for so many group buy ventures to be profitable, or even maintain a bank of deals.

dealon - Courtesy - April 22 2011

"Being an immigrant and a business owner myself I realize how hard it is for someone coming from a different mindset to start up a business in Israel," said Melbourne native Debbie Cukier, who launched Jerusalem-oriented GroopScoop last month. "With our site, we are not only allowing people to enjoy things in the city at a reasonable price, we're also turning to businesses owned by immigrants. We're helping the consumer, we're helping the businesses by widening their customer base and we're making a bit of money in the process."

AngloDeals, too, was created "primarily for Anglos living in Israel." Other English-language sites include ChaiBuy, the brainchild of recent arrivals from Canada, GroopBuy, founded by new immigrants from the U.S., and JDeal, the creation of four students from Jerusalem.

The sites work by banding people together for bulk discounts, usually from one or two purveyors a day, granted enough people sign up for the deal. For example, a site might offer a coupon for a one-month gym membership for NIS 180, which normally costs NIS 650. The model has proved successfull, popping up around then world. U.S. group-buying giant Groupon recently bought the Israeli site Grouper for $10 million.

Anglo group buy sites are particularly popular in Jerusalem, but some also offer deals for Tel Aviv and other parts of the country.

With so many Anglo-oriented group buy startups crowding the marketplace, websites must compete for both customers and merchants willing to peddle them deals.

"The competition is cutthroat. Every website is competing against every other site," says Toronto native Grayson Levy, who co-founded DealOn in February. "The problem is less getting customers to your website than getting the deals. Every merchant who is eligible for something like this gets visited constantly by all these websites and doesn't want to run deals with all of them."

Some merchants had bad experiences with group deal sites and won't work with them again, says Levy, who runs DealOn together Brazil-born Aharon Hadid.

Some of the larger companies write exclusivity clauses in the contract, which makes the competition for smaller sites even more difficult, he adds.

But GroopScoop's Cukier, who dismissed "unpleasant" comments on the company's Facebook page as "sour grapes," takes a more Darwinist approach.

"There's room for all of us," she said. "Whoever gives the best services and offers the best deals is the one who will survive."

The model's profitability, especially with so many copycat sites, has also not yet been proven.

"This is a side project and it will be a long time before this could be profitable," says Levy, who a few years ago created Frumster and Dosidate, two successful Orthodox dating sites, and still works in Web development.

Natan Neppe, who together with David Breuer runs AngloDeals, says he is hopeful about his venture, which is an aggregation site rather than a source of original coupons. His site primarily compiles offers from Hebrew-only sites, translating them into English and providing the link so users can take advantage of the deals.

"I was looking at the Hebrew sites, and I found myself calling friends every day telling them great deals at this site or that site," said Neppe, 30, who was born in Israel to Anglo parents. "Eventually we realized that people need something in English that they can go through every day and see all the deals instead of going through the Israeli websites that they can't read."

Not everybody is buying into the craze, though.

Ben Brewer, 28, says he was recently approached by one of the Anglo sites with an offer to sell drastically reduced coupons for his business, Israel Food Tours, which runs culinary tours around the country. But the Portland, Oregon native declined.

"For a lot of the group buying sites this is a good advertising expense, for example for a restaurant: customers buy the voucher and possibly spend more than the value of the voucher. But in the case of my business there isn't the possibility to spend more, and my customers are generally foreign customers so I couldn't count on it to generate enough repeat business for it to be economically worth my while," Brewer says. "Group deals are very fashionable now but I feel that a lot of companies are getting into it without fully understanding whether it's best for their business."