Groupon South Africa has appointed entrepreneur, Emilian Popa as its new CEO. The company has also announced that its two founders of its South African business, Daniel Guasco and Wayne Gosling are to step down from their positions. Emilian Popa was in the CNBC studio today, discussing the future of Groupon, the space in which it is playing, how it intends to execute its strategy going forward and what its focus for success is. Groupon has had a hard time internationally, with an anaemic share price and speculation surrounding its longevity. Emilian plans to drive the company as it seeks to take advantage of the ‘e-commerce pie’ in South Africa, the question is whether or not its focus on sustainability is enough? – LF
ALEC HOGG: Groupon South Africa has appointed Emilian Popa as its new Chief Executive. Off-air, Emilian was telling me that he was one of the three who founded Groupon in this country when it was still called Twangoo. Wayne Gosling and Daniel Guasco have both left the company. Emilian, thanks for coming through. That’s quite an interesting development. The three of you started it together three years ago. They had lockups. They departed. Did you also have a lockup?
EMILIAN POPA: When we started…at the time, it was City Deal, which belonged to Rocket Internet – the German VC Fund, which started City Deal. We sold Twangoo to City Deal. Dan and Wayne, my partners and co-founders stayed with Groupon as CEO’s and co CEO’s. I personally joined Rocket Internet, stayed more than two years, and followed the entrepreneurial path within Rocket Internet, launching companies around the world.
ALEC HOGG: So you’re back.
EMILIAN POPA: Yes, I’m back to Groupon. It’s a totally different company. We were three people when we started and now, it’s much bigger.
ALEC HOGG: It went through a bit of a bumpy road, though. At one point, the biggest spender in online space in South Africa – R70m in 2012 – and then, lots of people and then not as many people. What’s the story?
EMILIAN POPA: Look, when you start a company in a new market…when you start an online company, you need to spend money on marketing to acquire customers. As with any Rocket Internet-backed businesses, Groupon South Africa spent a lot of money on marketing, acquired a huge number of subscribers and customers, which makes it the biggest and most successful online retailer in this country today.
ALEC HOGG: Is it more successful than Kalahari?
EMILIAN POPA: Well, I’m not aware of the Kalahari numbers, but we believe Groupon is the biggest online retailer in the country.
ALEC HOGG: It came off with a bang. There was hardly a website you could go to that didn’t feature Groupon. Many people spoke about Groupon, and then you contracted. You dropped certain cities and refocused. This was before you came back. Are you looking to expand again?
EMILIAN POPA: I wouldn’t say ‘expand to cities’…rather, expand into categories. If you look at Groupon’s global strategy, which I plan to follow here in South Africa, it’s becoming a destination for local services, for travel, and for goods. This means that Groupon is becoming, more and more, an e-commerce company – more than it is today. This means that we plan globally, and in South Africa as well, to expand into a number of categories and products, from home, fashion, and anything that can be sold online and that people are looking for.
GUGULETHU MFUPHI: Emilian, Alec did touch on the level of competitiveness here in South Africa: the likes of Kalahari.com, Takealot.com, and even Naspers who is also looking to become an even bigger player in the e-commerce environment. Is the pie big enough, from a South African and an African perspective, for all these e-commerce players?
EMILIAN POPA: South Africa is still in the very beginning of e-commerce retail, I would say. If you look at the penetration of e-commerce over total retail, we’re still under one percent. I think it’s zero-point-eight or zero-point-seven. It’s growing very fast. It’s growing at 25 to 30 percent year-on-year. If you compare that to any major European or American market, which is between 15 and 20 percent of all our retail versus total retail, one can say there is a lot of place. Whether or not the pie is big enough…today, I would say the competition is very big. Groupon is a different company. Groupon currently…I wouldn’t say it competes directly with Takealot and Kalahari. Groupon is still a flash-sale dealer/online retailer, whereas Kalahari and Takealot are more into categories than catalogue sales.
ALEC HOGG: You say you’re going to follow the international strategy of Groupon, but Groupon’s lost a lot of ground globally. Look at the share price. It’s under pressure. When you put the whole brand’s trust together, how are you guys going to turn this around?
EMILIAN POPA: Groupon has indeed been through a lot of changes. We’ve been looking at what the right direction is for growth. If you Google about Groupon and the global strategy, we see clearly that it is going towards e-commerce. Even in the U.S., it is building about four houses, so it’s going into online retail. I believe that this is the right strategy. Online retail is the way to go. That’s what Google does. It’s what Amazon does. It’s what any major online company does.
ALEC HOGG: So bringing you back, having helped to found the company, and coming back into South Africa: does that mean that Groupon is going to be throwing money behind Groupon South Africa. Takealot has $100m support from the Robertson Tiger Fund. Is it a similar kind of thing, in your case?
EMILIAN POPA: I cannot say Groupon is going to throw money into the market. We are a profitable company here in South Africa, so we have enough cash flow to sustain growth. As an entrepreneur, I believe very much in companies that don’t spend a lot of money. We grow little by little. We look at every single Rand spent. We sell at a good margin. We’re a profitable company, so we’re not selling at a loss: neither products, nor services, or travel.
ALEC HOGG: The sustainability…
EMILIAN POPA: I think the sustainability is most important and that’s what I’ve been trying to apply in any business I launch.
ALEC HOGG: Emilian Popa is the Chief Executive of Groupon. Well, sustainability, Gugu – that’s what business is all about.
