I’m sure many people have heard about Groupon by now. If you haven’t, Groupon reportedly holds the record for the fastest growing company by revenue in history. It is a service that promises business massive exposure and many new customers if they use Groupon to offer ‘deals’.

Groupon is so successful that it has been copied tens of times all over the world. Even here in our Kenya, we have Rupu, Zetu and Sokopal.

Recentlyu, Groupon filed for an IPO (Initial Public Offering) in the US stock markets. This meant that, for the first time, anyone would be able to take a look at Groupon’s books. What people found was shocking. Basically, despite its very high sales revenues, Groupon is losing a whole lot of money and is nearly insolvent. But guess what? They continue to pay their initial investors hundreds of millions of dollars despite making losses.

This sounds vaguely familiar, doesn’t it? Just for reference: A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going.

That aside, Groupon is also reportedly not doing very well in its oldest markets, like Boston.

No one can tell what will happen to Groupon, but it seems the once bright star may be fading. At the very least, the business seems a bit ‘troubled’.

What about the Groupon look-alikes in Kenya? How are they faring? I cannot say with any amount of certainty how these businesses are doing. However, I feel that the amount of talk about these companies has gone down, and so has their visibility in the market. But this tells us nothing about their performance. Another sign may be that MyShillings and Sokopal seem to be ailing. Regardless, until we get our hands on solid financial records, we cannot say how these companies are doing. But if Groupon is in trouble, will our local copies come to face it too? Is the business model fundamentally flawed? No one knows.

Thinking Bigger
Let’s leave the doom and gloom for a minute and talk about something exciting: 123Cars. This is a website that enables people to buy cars cheaply. Here’s how it works, if you go alone to buy a car from a seller, you may get a price X but if you come with 10 of your friends and you all want to buy the same car, the seller is likely to give you significant discounts. 123Cars enables people to save thousands of dollars when purchasing a car.

If you think about it, this is a variation of the Groupon model. But I think it is better. Groupon focuses on forcing a business to give massive discounts (usually 75%) to give them hundreds of customers at one go. There a few problems with this model:

1. The discounts are too high for the business to afford
2. The business may get so many customers that it cannot serve them with their usual standards of quality
3. The kind of clients attracted by these deals are often ‘deal hunting’ and do not become loyal customers

In contrast, 123cars:

1. targets a niche industry where bulk discounts really do work
2. brings highly targeted customers – the customers are all interested in cars whereas the people buying Groupons are diverse and just in it for the discount

I feel that the 123cars variant of the Group Buying model offers more value to businesses.

Instead of simply coping Groupon (or even 123cars!), local entrepreneurs should think about what would make more sense in our market.

Have you ever been in a situation where you need to verify whether your ISP is really charging you fairly?

What is Masaa?
Masaa is a tool that tracks your internet usage, whether on per Minute or per MB billing and keeps a history of the data for future reference. Also provide are optional reminders based on cost or time preferences. Masaa is designed for non-technical users and is not appropriate for those who run a home network for file sharing, or as a print server.

Why do I need to track my data usage?
Data Modems are the most popular way of accessing the internet, unfortunately data providers such as Safaricom , Airtel or Orange Kenya do not provide regular usage data to their clients making it difficult to verify whether you are billed correctly. Also given the different billing packages such as per Minute billing offered by the providers Masaa will come in handy.

You can download Masaa by clicking here.

We recently wrote about two new ways to convert money in your PayPal account into money in your hands in Kenya. These were:

• Through babawatoto.com
• Through currency exchangers

But there is bad news. It seems the currency exchange method may be risky in that you can get scammed. As for Babawatoto.com, at least on Like Chapaa reader has complained that babawatoto.com do not accept requests originating from within Kenya.

We reached out to babawatoto.com for their views on this issue and this is the response that we got:

Kevin,

Thanks for your email.Due to past and current fraud concerns,we dont process any orders originating from Kenya or with a Kenyan paypal address.

Regards,

Customer Support,
Babawatoto Online
Email: Info@babawatoto.com
Web link:http://babawatoto.com

SO there you have it. If you live in Kenya then babawatoto.com will not help you and, indeed, there are literally no ways to withdraw your PayPal money from within Kenya. How sad. 🙁

As far as receiving payments online from within Kenya, here is the situation thus far (thanks to yeronly):

1. Paypal – there’s a comprehensive review about this in this (likechapaa) website. The best we have come to withdrawing in kenya without minimal hustles, from reviews of products offered, is babawatoto (sending money to ones mobile) whose advantages are those of mobile money transfer, and disadvantages include a bit expensive and quite low limit (upper limit is ksh. 20,000 for which the charge, at current exchange rate of ksh. 82/dollar is around ksh. 2,300 ). However, babawatoto.com has confirmed that they do not serve requests originating from Kenya.
2. Moneybookers – Allows wire transfers to local banks; could get challenges being paid by US clients from this. some (entities) will deduct as much as 5% if this is the mode of payment. With your P. O box number, they send a confirmation code to P. O box (received one within a month’s time), once confirmed, your transfer limit is increased.
3. Alertpay – allows wire transfers; main undoing, as is for moneybookers, is that most clients in the US will prefer Paypal.
4. Payoneer – this is a mastercard that is issued via partner websites (e.g. Elance, freelancer.com, etc; one must be a member at one of such partner sites to apply). one applies via a street address (e.g. Ngong road, Mombasa road, Kikuyu; then one provides ones post office box – via email – for shipping purposes). Waiting time varies, but received their card within a month. Withdraws in any mastercard supported ATMs (recently since barclays never charges for ATM withdraws, it is the best bet). Card activation $ 12. Standard loading i.e. depositing money to card (2 days) they charge $ 2; some other premium loading – immediate loading i.e within 2hrs they charge $5. monthly maintenance $ 3 Paypal does not allow withdrawing to this card unless you create a virtual US account at Payoneer which attracts additional charges.
5. Wire transfer – used only one bank for this and it charged ksh. 600 and exchanged at lower-than-market rates. The best option here: create a dollar (foreign currency) account, withdraw money once in, exchange in a forex bureau (their rates are a bit high than banks’), deposit your ksh back if you please.

And that’s how it is! Currently.