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Will you click on my ‘lifted idea’?

Entrepreneurs in Dubai are good at ‘lifting’ ideas. Not short of people who travel the world, and with an itch to get ahead, business ideas are consumed voraciously from around the world and transplanted here. Precisely because ideas are predominantly ‘borrowed’ and not entirely original, it’s rare that when they do come they come alone. Usually, like buses, at least three companies/and or individuals have spotted the same idea and seen it as their pathway to glory.

Take Group Buying sites. When GroupOn turned down $6bn from Google, so Dubai web entrepreneurs behind YallaBanana.com, Cobone.com, GoNabit.com… and a good 10 more got their excel spreadsheets out and began working out whether the idea was a viable one. Excel is a seductive animal and pretty soon many individuals had identified a pathway to riches that has, so far, proved more mirage than reality.

Lifting ideas, in this way, is a perfectly valid thing to do. Though internet has no borders, most web businesses have a very defined customer base, and in all but the biggest, these are usually limited to a city, and/or country. If that idea could do equally well outside that country, why should you not be the one to do it?

You don’t even have to be first: The ‘first mover advantage’ is an advantage, but only that. Long term it’s about doing it better, not about doing it first.

The latest trend in the UAE are comparison sites for financial services: insurance (home, car, etc), credit cards, loans, etc. These are not new elsewhere, but they took a little time to filter in to the UAE.

In the UK, Moneysupermarket.com is by far the largest. The website enables consumers to compare prices on a range of products, including mortgages, credit cards and loans. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. It currently has a market cap of around GBP 1 billion. 

Who would not settle for an early exit and 1/10th of that…

That’s no doubt the thinking of the owners of Bayzat.com, Souqalmal.com, moneyshop.ae, and moneycamel.com, all early entrants to the UAE market.

All are very simple compared to their international peers, but do the fundamentals of what a price comparison site should do reasonably well, allow you to get a quick overview of financial products in a specific segment.

If you’re after a home loan or a credit card, they really do represent a good way to get the basics of what’s on offer and some of the small print (what’s the penalty for paying back your home loan early, for example), although not necessarily all.

The increased transparency the sites offer should also ultimately result in better services for end users, which can only be a good thing.

Users of these sites should be aware that their owners are not altruists. While price comparison sites often like to portray themselves as consumer champions (and in some ways to be fair they are), the reality also is collecting all this data, and building these websites costs money. The entrepreneurs running them therefore need money to pay for all of this, and one day, they hope, to turn all this into a multiple for a sale.

Price comparison sites earn their money on commissions paid by the very companies that feature on their websites.

In the UK some £650 million (approximately Dh4bn, a 2009 figure, likely to have risen significantly since) is paid out every year in commissions to these sites. The average commission equates to about £40 (Dh360) for an insurance deal, rising to £150 (Dh920) on more profitable loans.

When you click on a price comparison site, remember, you have just paid for the work it has done for you.

In other markets this has led to fears as to whether the consumer really is getting a good deal. Many price comparison sites do not, for example, feature financial providers they do not have a commercial tie-up with. You cannot always be getting the best deal, because not all the deals are listed.

Criticism has also come from sponsored links and featured positions. Human beings by their very nature are a little lazy and will look for the easiest and quickest route to solve a problem (it’s why price comparison sites exist in the first place, they do the groundwork for you!). Sponsors of course are aware of this, and know listings at the top of the page will have a significantly higher click through than those at the bottom.

These positions, if the site allows it, will be bought for a premium.

It’s still very much early days in the UAE, and chances are the sites that are here will still be struggling to set up commercial tie-ups. For the time being that means as many listings as the site is able to find will be posted to build up an audience, which financial providers will find compelling.

A bigger issue for the moment is likely to be how well resourced the current sites are. This matters to you as the end consumer, if you truly want the best deal. Keeping listings up to date will be time consuming and therefore cost intensive, and until money is found to support the business, a constant challenge for the service providers…