Meituan’s T-shirts for gay couples.

Today and tomorrow is a sort of Chinese Valentine’s, so it’s an apt time for couples to be thinking of one another. That explains the timing behind China’s most surprising daily deal being offered by a Groupon-style site. The homegrown deals startup Meituan is offering a free trip to Vancouver, Canada, for one gay couple to go get legally married in that country.

The deal is being offered for free (see it here) to one Chinese gay couple. While Canada has legalized same-sex marriage, China hasn’t, so the resultant marriage certificate will be just a fancy piece of paper once the couple returns to Big Red.

Meituan’s free deal will cover travel expenses and one night of accommodation for the couple in Vancouver. Only one couple can win, with a draw to be held tomorrow to choose a winner. So far, nearly 80,000 people have entered to win.

As the site points out, same-sex couples do not need a Canadian residence permit or any such paperwork in order to get hitched there, and it can be done in a “very convenient” way on a tourist visa. Other cities and nations have been encouraging gay tripper tourism like this. I’m not sure why Meituan chose Canada over the US, but perhaps it’s because maple syrup is awesome – or because a wedding day can be rather ruined by being shot in the head.

As a sign that China’s youngsters are a lot more open than the traditionalism displayed by authorities, Meituan’s deals page hails “true love, regardless of gender” and calls on gay Chinese to “bravely get married”. Last year Meituan gave out free rainbow T-shirts for the two Chinese Valentine’s days. Today is the day for men to profess their love, while tomorrow is for women to reciprocate.

Meituan is China’s largest indie deals site right now with 13.1 percent market share in the highly fractured market. It pulls in over $150 million per month in transactions.

(Hat-tip to @bokane for spotting this)

Of course, handling a billion RMB in transactions doesn’t mean the company sees nearly that much in profits or even revenue. But it does indicate that as the daily deals market continues to consolidate, Meituan is gaining ground rather than losing it. That’s important, given that founder Wang Xing has set his sights on breaking the hundred billion mark in yearly transactions by the year 2015.

(via Sina Tech)

In Vietnam, we’ve got lots of homegrown daily deals and e-commerce sites, as well as a few foreign companies like Rocket Internet and China’s Vancl entering the fray. So it’s pretty hard to find unique models like Shopby in the mix.

Shopby, which is basically a social commerce site directed at daily deals based in Hanoi, Vietnam, beta-launched in April 2012, and fully launched in December 2012. It’s a team of nine people. With currently over 11,000 users and approximately 500 to 5,000 visits per day, depending on deals and timing. It has 30 deals at a time and each lasts anywhere from one day to a month, mostly focused on fashion and food and beverage. The website is actually a pet project of SmartOSC, whose main business is building projects with Magento, an e-commerce platform. E-commerce is in their blood.

The idea of social commerce as used by Shopby, according to CEO Hieu Nguyen, is as he says:

A central place to bring people together who are buying the same things. People can make purchases based on interests of others on their social graph. Usually, customers make a decision to buy an item based on recommendations and interests from the people most relevant to them.

Outside of the social graph side of things, Shopby also allows users to follow shops they like and, of course, follow friends. Users can create their own new account, but mainly they use Facebook to login.

Shopby does have some competitors in the space, including Zaia.vn and Guu.vn but they don’t exactly approach it from the same social perspective. With Shopby, businesses and users can upload their own deals directly onto the site – these deals are only displayed if they are relevant to users in their social circle. Businesses can check statistics on user behavior and reaction to their deals. Looking to the future, Hieu says:

Currently, we’re in phase one where users can post deals they like. But in phase two, we’ll allow users to request deals. Thus requesting discounts on certain items in a shop. Phase two will come out in June.

At the moment, Shopby is in its growth phase so revenue is nil. In the future, Hieu is looking to grow it into a marketing platform, charging businesses for listings – and there’s a current stealth model for phase two of the company.

If you’ve been following e-commerce and daily deals in Vietnam, you know that Nhom Mua fell hard late last year due to internal issues. And in the midst of that, Nhom Mua’s original founder, Tom Tran, got ousted. Well, Tom is back, with a new daily deals site to take on Nhom Mua, and it’s called Kay.

For an already bloated daily deals market, where at one point in time over 90 players were vying for the market, it’s an odd shot in the dark for Kay to step in, since it’s going to have to work hard to catch up. Today, there are about four dominant players in Vietnam’s daily deals market, namely Nhom Mua, Hotdeal, Mua Chung, and Cung Mua. What Kay does have going for it is a founder well-versed in how to make daily deals succeed.

When you take a look at the site, it’s very clear and not so overwhelmed with deals like the current leaders. This could be because they’re new, but it also makes for a nice interface. Kay features three services: services, tourism, and coupons, but the two former features have not been opened up on the site yet.

I’ve reached out to the Kay team, but according to Ngan from Action.vn, Tom usually hides from the media.

Founded by Phillip Pastoral and the United Neon Group, LocalRoam started up in November 2011. I had a chat with Vanessa Lizano, LocalRoam’s assistant manager for details of how Localroam is doing:

What is LocalRoam?

Vanessa: It acts like a purchasing department for SMEs and households to help them maximize their purchasing power. At the same time the co-op encourages reciprocity from its members to encourage loyalty. We believe preferential prices can and should be given as a reward for customer loyalty.

Can you clarify what a “loyalty-based cooperative buying online marketplace” actually is?

Vanessa: Loyalty means Localroam avoids enlisting directly competing companies (and if so, for a collaborative purpose) and promoting directly competing products/services. As a result, the offer selections are limited but well-selected so buyers are encouraged to patronize our co-op businesses in return for better prices.

How and why did you come up with the idea behind LocalRoam?

Vanessa: We observed how giant corporations or rich individuals enjoy better price preferences because of volume-buying. We want to do the same for SMEs and the ordinary consumer by helping them aggregate their purchases in return for loyalty. The co-op promotes loyalty by selecting and promoting non-competing co-op partners.

How do you “value” a consumer’s loyalty? Do you give rebates, for example? Or a bigger discount if one’s buying for an organization?

Vanessa: We get the best discounts normally reserved for top clients (usually large corporations) and pass it on to our members. The discounts may be less than group buy discounts, but they are always available. It’s a new way of doing things.

What is the main difference between LocalRoam and other group buying sites?

Vanessa: Localroam is an ongoing sales channel for our businesses. Offers are made available on a more long-term basis of a few days only. Because of this, relationships with our co-op partners are long-term so it is in our interest to help them develop and grow to serve our buying members. Group buy deals are very short-term and keep changing (often with competitors). It doesn’t encourage strong relationships between buyers and sellers or what we call in the Philippines a “suki” relationship.

SME members and consumer members get to find quality services and save money on those using the convenience of an online marketplace. LocalRoam does all the heavy leg-work of selecting and qualifying offers then get the best prices for our members so they do not have to waste precious time and energy looking, screening and negotiating. This is a big advantage big companies have which the small buyer doesn’t have.

Can you share some of LocalRoam’s goals?

Vanessa: Our immediate goal is to form a strong community of partners with the Bank of the Philippine Islands (BPI) at the core and help our partners establish strong trade within the co-op. Each partner brings with it their own community of employees, clients, depositors, etc. Long-term will would like to see SMEs and households save up to 10 percent of their budgets to help them put it to more productive use.

Just like any form of business, we’d be curious how they actually make money. According to Vanessa, the lifeblood of their biz comes from “transaction commission”. Not bad, I think. If it’s any indication, LocalRoam with more than 27,000 likes on their Facebook page, I could only assume their revenue must be good.

China’s top e-commerce player, Alibaba, also runs the nation’s leading daily deals site. Run under the familiar Taobao brand name and URL as Juhuasuan, the site is today expanding to include customers and daily deals in Hong Kong and Taiwan.

Centered around a new overseas site at hk.ju.taobao.com, the number of offers right now is very limited, but that will expand over time. The main Juhuasuan deals site has several thousand product listings at any given time, so it might be a while before relevant deals are made available to new users in Hong Kong and Taiwan. (UPDATED the stat about product listings to correct a mistake).

This new version of Juhuasuan will focus on deals for things like clothing, homeware, mother and baby products, consumer electronic accessories, and children’s toys. Travel and “lifestyle” deals will appear in a few weeks’ time, though it’s not clear if that will cover food/restaurants. But it will be an interesting challenge to Groupon in both Hong Kong and Taiwan.

The new site has ‘traditional’ Chinese characters, which is the script used in Hong Kong and Taiwan. Just last week we were talking to Daphne Lee, the director of Taobao international business, who told us how Alibaba is keen to expand its various e-commerce offerings to Hong Kong, Taiwan, Singapore, and across Southeast Asia, though there’s no word yet of the whole site being made available in English or other languages.

In today’s announcement, Daphne said:

[W]e firmly believe will enhance and complement the online shopping experience at Taobao Marketplace and Tmall.com for our more-than two million registered users in Hong Kong and Taiwan. In 2012, we continued to improve upon platform infrastructure and introduced new features such as the Alipay Card to make online shopping more convenient for Hong Kong and Taiwan consumers. Users can expect an even more diverse and comprehensive set of new and localized features and services to be rolled out in 2013.

This is the second consumer-oriented Alibaba site to venture overseas after the afore-mentioned expansion of the C2C Taobao shopping site. The Juhuasuan overseas service is promising delivery of its items in one or two days. For travel and lifestyle deals, QR codes or serial numbers will be employed so that shoppers can collect their deal from a retailer.

In our most recent daily deals industry stats, Taobao Juhuasuan has 47.8 percent market share by revenue – that’s way ahead of the indie Groupon clone Meituan with 13.1 percent share.

Daily deals have been one of the biggest trends to hit the internet since social media. Pioneered and popularized by Groupon, the deals model swept the world by storm and the Philippines is no exception. The pole star in the Philippines is Ralph Wunsch’s MetroDeal, which gets over two million unique visitors per month and is currently the Philippines’ number one e-commerce site.

Since I’ll be chatting with Ralph on April 5th at Startup Asia, I thought it’d be nice for you to have a quick preview of what MetroDeal is all about and what kinds of insights can be gleaned from his work.

Ralph’s actually half Austrian and half Filipino. Having worked successfully in a daily deals site in Austria, he went on to found MetroDeal in the Philippines.

Ralph started MetroDeal alone in late 2010 with one laptop and working out of his apartment. Within 15 minutes of launching the website, he sold his first deal. It went on to sell over one thousand times. In the first month, he made $50,000 of sales. By his fourth month, he had already hit $1 million. This was all in a period when he was hacking away solo with one person to do customer service. By the end of 2011, he had over 20 employees and by the end of 2012, he had over 50 people.

By 2012, MetroDeal achieved over $18 million in sales and is projected to hit $20 million by the end of 2013. It’s currently profitable.

Much of MetroDeal’s success can be attributed to a local market that was still weak in understanding the market for daily deals and the enticing offers his site pushed forward. One offer that Ralph noted to me was a buffet dinner cruise that was offered at 50 percent off. This deal sold over 40,000 times in two days alone. According to Ralph:

That’s a record in all of Southeast Asia, even. And that came out when we were barely six months old. It’s deals like these that really put us on the map.

Next up for MetroDeal is the launching of a new travel portal that will leverage their market penetration where sites like Agoda are still unknown.

Swing by in the afternoon at 3:30pm on April 5th (the second day of our event) where I’ll be interviewing Ralph to get more details on MetroDeal and the key elements to his success that we can glean for our own startups.

Stilomo, one of the first graduates from the Jakarta Founders Institute, launched its mobile site for daily deals last month. The startup’s site not only lists its own food and beverage promotions (where users get to use free coupons by sharing on social media sites), but Stilomo now also lists current deals from nearby companies like malls and banks. That’s quite helpful for shoppers, and shows that the startup is comfortable enough to help connect people with anything, even if it’s not actually a deal that Stilomo makes any money from.

The mobile site looks nice, and the startup tells us that there are now around 2,500 Stilomo users. The team’s iOS app should be launched in the near future. The startup’s current goal is to list food promotions scattered across the country, and put them into one convenient place in Stilomo. I think this is definitely helpful as people here usually have more than one credit card (which usually leads to lots of promotions and discounts), and so Stilomo can help update shoppers about the latest deals.

Stilomo launched its Android app last October and raised angel funding two months earlier. Though I for one think that there are already too many daily deals site in Indonesia, Stilomo’s food directory can prove to be a differentiator in the market. At least it can help generate foot-traffic for stores and in return that helps promote Stilomo’s own deals to retailers.

If you asked 100 Chinese people where they buy online deals for discounted restaurant meals, then I suspect most would give wildly different answers; but if you were to ask the same number of Chinese women where they get daily deals on make-up, I think most of them would say Jumei.com. That’s because Jumei has shown the value in specialization in China’s cut-throat group market, focusing solely on well-known brands of make-up and skincare products.

Jumei’s CEO is Chen Ou. At 29 years of age, we recently listed him among 15 web entrepreneurs in China under 30. Chen recently told Chinese media that Jumei pulled in RMB 2.5 billion (US$400 million) in sales revenue in 2012 as a whole, and that the deals site has just started to turn a profit. That’s a rare feat in the deals business.

Indeed, Chen reckons that Jumei can make $100 million in net profits by the end of this year on the back of an anticipated $1 billion to $1.6 billion in sales revenue in 2013.

Jumei is also expanding its scope. Aside from the usual deals, the site will soon launch an open platform online mall where merchants can set up a virtual storefront to sell make-up and a wider selection of fashion items. To ensure it picks up quality sellers, it’ll only accept merchants who are already on Tmall, China’s top B2C e-commerce site.

The stats from the Jumei CEO seem to put that specialist deals site on a par with some of China’s top Groupon-esque sites in terms of sales, such as Lashou, 55Tuan, and Nuomi, who are also pulling in about $1 million per day from their sold deals.

(Sources: Marbridge and QQ Tech)

Baidu’s new daily deals site, which came online very quietly this week.

We tend to write about daily deals sites in China shutting down, not opening up. So this week’s quiet launch of a new deals portal run by Baidu (NASDAQ:BIDU), China’s top search engine, is a bit of a novelty. The new ‘Baidu Group Buy‘ site, to translate its name very literally, currently only serves up deals in Beijing and seems to be a beta release. We reached out to Baidu HQ in Beijing, but a representative couldn’t comment on this new roll-out.

It’s not Baidu’s first venture into Groupon territory. The search company already has a deals aggregator site (using the same brand name, which is confusing), and previously ran the You’a Tuangou site before that got spun off and left to You’a to run. And so the new Baidu Group Buy is the company’s main challenge to a wealth of local rivals for food, fashion, and leisure deals.

As we observed recently, a deals site in China now needs in excess of $32 million in revenue per month in order to be considered a top player. Alibaba’s Juhuasuan dominates the sector with 47.8 percent market share, with Meituan second (13.1 percent), and Dianping third (8.6 percent). Groupon’s China site, Gaopeng languishes in ninth place in this most recent market share data:

(UPDATE: Corrected the ‘$32 million’ figure mentioned above after a correction was issued from our original source).

(Hat-tip to Techweb (article in Chinese) for spotting this)

Indonesian game developer TouchTen has announced today that the startup has made an exclusive partnership with Singapore-based loyalty app Gimmie. At the same time, the game developer revealed that its popular game Train Legend has rolled into the top five among free apps on the US iTunes App Store.

Previously aiming mostly for overseas markets with its games, now Touchten is keen to monetize the games in its homeland, Indonesia. The partnership with Gimmie is for exactly that purpose. TouchTen COO Anton Rokimas Soeharyo explains the challenge for local developers:

PayPal users and credit card holders are rare. Revenues for showing ads are low, and direct carrier billing with telcos involves them taking the lion’s share of revenue.

By partnering with Gimmie, now users can rack up points by playing any TouchTen games – and then redeem those points from a selection of prizes, such as for a discount voucher (see screenshots below). CEO Anton Soeharyo told us that TouchTen will earn money every time its users do things like using the aforementioned vouchers at a merchant’s store. He said that we can expect big food and beverage retail chains to participate in the near future.

This partnership also makes a lot of sense because those two startups are backed by the same investor, Ideosource.

At the same time, Train Legend (pictured below) has officially replaced Infinite Sky as the startup’s flagship game in the US. According to AppAnnie, Train Legend broke into the top five overall free app section in the US three days ago, while ranking first in the arcade category at the same time. Train Legend has also had great reception in Canada. Infinite Sky’s biggest success in the US was to reach the top eight overall spot for free apps.

TechCrunch reports that TouchTen now has about five million users from all of its games. Furthermore, the startup has gathered around 500,000 monthly active users in the past seven months. The game developer recently released its newest game, Cute Kill, which lets users control a baby who’s killing chasing zombies.

Train Legend is available free on iOS and Android.

We’re following China’s daily deals market very closely, digging into quarterly market share data as soon as we can get our hands on it. Today it’s time for Q4 2012 statistics courtesy once again of Dataotuan. We can see that China’s top three deals sites remained the same – and to join their ranks at the top of the industry and be a serious player, you need to be bringing in over US$32 million (RMB 200 million) in revenue per month. (UPDATED March 3rd: Dataotuan issued a correction for that number, and so we have amended it accordingly in this article).

Indeed, China’s top three – Taobao Juhuasuan (first), Meituan (second), and Dianping – now account for 70 percent of all revenue in this group buying sector. That’s up from the triumvirate dominating 62 percent of sales in Q3.

Before seeing all the market share details, let’s see how this hierarchy is emerging among the deals sites. Previously, stronger sites like 55Tuan and Lashou are continuing to lose market share and so they’re now in a lower tier of players:

The market leader, Taobao Juhuasuan, saw a huge surge in revenues from Q3 to Q4 going up from 34 percent to 47.8 percent. Remember that Taobao Juhuasuan is a part of China’s massive Alibaba Group, which runs the Taobao and Tmall online stores, so it’s clearly a rival that can eat up any online sales channels:

For more details about average spending per customer and the kinds of deals they buy, check out the full slideshow:

See more statistics from Dataotuan on their blog.

What do startups in Vietnam need or lack? I asked this recently to a bunch of friends on the way back from new annual conference for the technology community. They immediately replied: Focus! Technical Skills! Exposure! Creativity! Courage! The event underlined something rather poignant in technology events in Hanoi and Saigon. There’s a disconnect. High-level speakers flew in from around the world to talk about what’s next in technology, but how relevant are 3D gesture interfaces to a country that is still dominated by feature phones?

One of my venture capitalist friends summed it up well: “From heaven to hell”, he said. “Speakers at all the local events in technology talk about things that are rarely ever relevant to actual problems in Vietnamese startups. It’s like angels talking to devils.” But what are the problems? Essentially, the question really is, how can the Vietnamese tech community, centered in Hanoi and Ho Chi Minh city, achieve a Silicon Valley-like cohesion that produces great individuals, companies, and products that significantly impact domestic and worldwide markets?

Over the last three months, I’ve uncovered five main areas of improvement commonly cited by local CEOs and executives in the tech industry: community building, handling of ideas, execution, technical skills, and business savvy. Let’s delve into the mechanics of each.

1. Community building

In 2009, community was something rather hard to find here. Facebook was still well under three million users (but now it’s the largest social network in Vietnam, with over eight million users) and events for tech enthusiasts were hard to come by or low in attendance. Barcamp Saigon was the biggest event on the map with a few hundred attendees. Homegrown web companies like VNG, VC Corp, and others were still on the rise. Online, there was no place to meet other like-minded folks except in fragmented forums across the web. That’s where Launch came in.

Launch, branded as the “Vietnam Internet Startup Community”, only had a few hundred members by the end of 2009. For Trung Huynh, one of the early co-founders of Launch, he felt that communication was vital.

People didn’t know each other, they didn’t know who was doing what, they didn’t have access to Silicon Valley wisdom about starting up, they barely had access to the latest trends in tech. So we first started Launch by translating content from leaders in the the tech scene like Paul Graham, and monthly events with successful Vietnamese CEO’s.

After six months of this, the community started to self-sustain. Launch members organized their own events and brought their own topics to the Facebook group. Today, there are 5,631 members and it’s the number one place to go for techies to go to talk about hot tech topics in Vietnam.

Today, more Facebook groups are popping up in more niche web-oriented areas: technical, founders, startup news, and so on. And yet, the community problem persists somehow. That’s because Launch only solved the logistical problem. The other side of communication is an attitude towards ideas.

2. How new ideas are handled

Like much of East Asia, Vietnamese kids are raised in a Confucian household. That means veering from the status quo is frowned upon and adhering to a hierarchy is the default. Also, being a developing country and burgeoning tech community, that means the environment is both very competitive and young. The status quo makes people cautious about new ideas, and competition makes people feel protective about their creations. This is reflected in the market.

When a startup goes to a big business to pitch, let’s say, from a B2B e-commerce service, companies are skeptical. B2B startups will often think here: “Why should our company take a chance on your no-name company that has not proven itself in the market?” The risk is high. Is it any wonder that there are so many consumer-oriented e-commerce and social media clones in the market? These are considered safer bets, consumers are more ready to take a chance than businesses. The risk is low.

This has bred, as Nguyen Tuan Son of Kleii puts it, two types of thoughts that entrepreneuers have:

• That idea is too big, I can’t do it. Or someone else will do it.
• I’ll just follow other people’s ideas.

Protecting ideas, on the other hand, actually bleeds into another much ignored area: execution.

3. Protecting new ideas vs executing new ideas

In a developing Asian economy like Vietnam, people copy ideas. Therefore, there is a fear of being copied, and it’s warranted. We’ve seen it in neighboring China. Every new market among tech startups in Vietnam is crowded: e-commerce, chat apps, social media, daily deals. The problem is that this has reduced emphasis on other more important factors to success and put more emphasis on ideas and protecting those ideas. What’s missing is an emphasis on execution, team building, and relationships.

Startups don’t realize that ideas are not what make a startup successful – a good execution of those ideas is. As Nhan Tri Vu of JoomlArt told me recently, companies believe too strongly in their ideas to their own detriment. They don’t know how to read their own data and the market, and instead play deconstructive ego games.

Viet Hung of KMS extols the benefits of team-building over ideas:

One one side, the business landscape needs to support the development of software, but also leadership and communication is still weak. Entrepreneurs and technology people don’t realize the importance of building a great team. If you are a great leader, you can get other people to join you, but if you are a weak team, why would talented people join you?

4. Technical Skills

But are there enough talented people in Vietnam’s technical landscape? Vietnam churns out over 150,000 graduates per year in information technology, but many managing directors and CEOs complain that it is hard to hire and maintain good talent. This is especially true for projects that require advanced technical solutions like OCR, augmented reality, and newer programming languages like Python.

The conference I mentioned at the start is BTIC. At this year’s event, Le Hong Minh of VNG, one of Vietnam’s top tech companies, cited three criticisms of Vietnamese tech talent from a Japanese company they worked with:

• They’re not hungry enough
• They’re don’t eat their own dog food
• They’re not fast enough.

On top of these three issues, it’s also hard to find technical people who willingly go out and experiment with new languages and create their own projects without supervision.

A common criticism that I have also encountered in interviews is that there is a lack of product managers and system architects. When building new products, teams don’t have a power user that is extremely knowledgable about the details of a product and can lead a vision of a product. They also don’t have people that can build highly sophisticated pieces of software that can handle a large amount of data and computations.

This has been a struggle for foreign companies and outsourcing companies who need to complete more sophisticated software projects for international companies. It also ripples into startups. If there aren’t experienced product managers and system architects around, how can entrepreneurs dream about high-tech solutions?

5. Business Savvy: Going to Market

Lastly, and maybe most importantly on this list is business.

Some technical teams don’t realize how much they need a business person, and others are struggling to find a capable one. The problem is that teams are not looking at problems. Nguyen Van Loc at Ao Thun advises:

Businesses make money by serving society. Our biggest problem is to define what our society really needs.

Chris Zobrist at The Start Network echoes the same:

Most of them get stuck in the very early phase of a new venture due to a lack of focus on what customers need and solving a real customer problem.

Is the market ready for such thinking? Viet Hung of KMS warns that the Vietnamese software market is precarious. If I sell software to a consumer, but he can get that same software on the street for free on a DVD, where’s the money? If I can’t get any money from this, how can I fund talented engineers? If I can’t fund talented engineers, how can I produce a great product? It’s better to go global instead.

The Way Forward

To top it all off, software policy may be becoming more restrictive in 2013. In EuroCham Vietnam’s recent recommendations (PDF link) to Vietnamese policy makers, they’ve warned that the new restrictive and bureaucratic regulations on software development will stunt a lot of needed growth that would address many of the above issues.

All of this looks pretty stark, right? Well, let’s leave it at that for now, I’ll address the strengths of Vietnam’s tech scene in a later article.

(Thanks to the quoted interviewees, as well as other CEOs and directors who agreed to talk but preferred to remain anonymous)

E-commerce in Vietnam isn’t showing any signs of slowing down. With daily deals leading the trend in 2012, this year is set to be one where smartphones dominate. CityOffers fits right into this new market.

It’s a daily deals iPhone app, and it’s the only mobile-only deals app in Vietnam. CityOffers.vn was quietly launched in November last year, avoiding the usual clutter of Groupon-like sites.

The app displays deals in Hanoi and Ho Chi Minh based on your GPS location. When you click to receive the deal, your phone is asked to send a text message to the main service, which then sends you a voucher code. The app allows you to go into a map view to see the deals nearest to you. It also allows users to share offers on Facebook.

This application comes at what some in the technology community believe is the end of the daily deals trend. That’s because Groupon’s stock price is down to a bargain price, and due to the crash that leading daily deals site, Nhom Mua, experienced recently. Some people I’ve spoke with in recent weeks have even hinted that it is much easier to make money on mobile, mainly because of the charges that you could make via SMS and piggybacking on telco services. Charges that websites cannot take advantage of.

It has also gotten easier for Vietnamese mobile consumers to top up their phones. Not only are cigarette sellers on almost every corner of Vietnam selling top-up cards, but we are starting to see top-up kiosks where any consumer can add money to their phone, regardless of telco subscriber.

We’re looking forward to an especially competitive mobile landscape in 2013.

Find CityOffers for iPhone in the App Store or on Appstore.vn.

Chinese group buying site 24Quan, once in the country’s top five deals sites, has been in the rough for some time now, and it suspended operations back in October. So the following shouldn’t come as a huge surprise to anyone: the site has now apparently shut down for good. The company’s site now appears to be inaccessible, and there are doubts about whether the company will be able to pay all of its outstanding debts with merchants.

24Quan founder Du Yinan (who we talked to about the company’s troubles way back in November of 2011) has yet to comment on the closing, and a 24Quan investor told Sina Tech that the board would need wait for instructions before speaking to the media.

Given that, I suppose it’s technically possible the company could rise, phoenix-like from the ashes to take on the world of group buy in China, but I wouldn’t bet on it. After months of inactivity, those ashes are going to stay ashes, and Du Yinan — like so many entrepreneurs — will move on to his next great idea.

[via Sina Tech]

With China’s e-commerce market consisting of so many sites, the rather unique Mizhe.com is making a business out of being an online shopping guide that offers discounts for shoppers on top Chinese e-tailers. That hasn’t gone unnoticed by IDG Capital Partners, which has invested just over 10 million RMB (US$1.6 million) in a series A funding round for Mizhe.

The investment news was revealed this week, but Mizhe founder Zhang Lianglun said that the IDG backing was wrapped up last summer and the funds have already come through.

As with social pinboard sites like Mogujie), Mizhe’s shopping guide monetizes from referral links to e-commerce sites such as Taobao, Amazon China, and many more. Mizhe claims to generate over 100 million RMB ($16 million) in sales via its platform, though it’s not clear how much revenue can be squeezed from all those referrals. The site says it now has millions of users signed up, and hundreds of thousands of daily active shoppers.

The Mizhe frontpage, which emphasizes getting discounts on China’s top e-commerce sites. Click to enlarge.

The discounts-oriented site claims to offer as much as 50 percent off some purchases, but most price-cuts will be just a few percent. The startup – founded in August 2011 – also has coupons, which are the focus of its Miquan.com sister site.

Founder Zhang Lianglun knows the e-commerce business, being a former employee of Alibaba, the company that runs Taobao and Tmall, the nation’s top two online malls.

Other Chinese e-commerce sites in IDG’s portfolio include top travel site Ctrip, and the Amazon-esque Dangdang. IDG also led the recent massive series C round in the afore-mentioned social shopping site Mogujie.

(Source: Kuailiyu – article in Chinese)

After the initial kerfuffle over Groupon clones in China a couple of years ago, the daily deals sector in the country ended up being dominated by a familiar name: Taobao. With 34 percent market share by revenue, Taobao Juhuasuan has shown that the homegrown e-commerce giant Alibaba was able to adapt to deals alongside its other online retailing sites. Over the weekend, Alibaba revealed that its own deals site hit 20.75 billion RMB (US$3.3 billion) in sales [1] in the whole of 2012. That figure is 2.03 times greater than it was in 2011.

Alibaba also disclosed that Taobao Juhuasuan (at ju.taobao.com), not to be confused with the C2C online mall that Alibaba runs at Taobao.com, has achieved a peak of 16 million visits. The deals portal saw an average of eight million unique visitors throughout the year.

The e-commerce firm has been diversifying its deals so as to differentiate Juhuasuan from its many competitors. One example was the recent promotion whereby household items like sofas and TVs could be specced and customized by buyers who had placed a deposit on the modded items. In this way, the daily deals industry is slowly merging with more conventional e-commerce models, as well as evolving out of the low-profit cut-price deals niche. Alibaba says it plans more promotions like that on its deals platform.

The Juhuasuan site has double the market share of its nearest rival, Meituan, in a highly fragmented market where thousands of smaller deals sites die off every year. The only major consolidation we’ve seen in the industry was when Alibaba’s major rival, Tencent, oversaw the merger of Groupon China with FTuan.

In other news from Alibaba that also involves huge numbers, the company said recently that its two online malls, Taobao and Tmall, generated $159.5 billion in sales in the first 11 months of 2012.

China’s daily deals market is about as crowded as a Beijing bus in a rainy rush hour, and so a lot of Groupon-like sites are struggling on tiny profit margins that ultimately result in consistent losses. That’s why thousands of them go out of business every year. But 55Tuan says it has bucked the gloomy trend and actually turned a profit.

55Tuan is China’s fifth-largest deals site in Q3 2012 data. Its CEO, Xu Maodong, claimed yesterday that his company is the first one in China to turn a profit, a feat that’ll occur for its operations in December.

But the achievement is not entirely down to the deals/group buying model as 55Tuan has been diversifying this year into more of a conventional B2C e-commerce platform. It’s emulating China’s online shopping leader, Tmall, in running brand storefronts. Currently 55Tuan has 100,000 companies onboard its new platform, with 1,000 enterprises opening stores on it every day.

China daily deals industry, market share at Q3 2012. Click to enlarge.

Xu Maodong emphasized that deals sites need to become online shopping malls if they’re to survive at all.

At the start of this year, 55Tuan co-founder James Tan was one of several guests onstage at our Startup Asia Singapore conference. When asked about IPO plans and the 2011 financial scandals that rocked several Chinese companies, he said:

There is a crisis of trust in Chinese companies that started back in May or June [2011]. We took a step back to look at the best time to list. We had to step back and ask, do we need capital or not.

He added that “we transact more than $1 million” on the site. 55Tuan has not said publicly that it might go public soon, but a slice of profit will sure help enliven the IPO prospectus.

China’s daily deals market has stabilized a lot in 2012, seeing consistent leaders emerge. The top five in terms of market share are Meituan, Dianping, Nuomi, Lashou, and 55Tuan.

[Source: MorningWhistle]

Although Nhom Mua, Vietnam’s leading group-buying site, is finally back online, the news of its investigation by authorities – and the website takedown – has sent shockwaves throughout the startup community and Nhom Mua’s many customers nationwide. With some customers are left stranded, unable to use their coupons nationwide, it harkens to larger Vietnamese economic controversies. Now, there seems to be two directions that the online group-buying market could go in Vietnam.

Will there be an increased skepticism of web companies, as evidenced by consistent low spending in online advertising, a market that group-buying sites are eager to penetrate? Or will Nhom Mua’s brief fall signal a chance for the mass of Groupon clones to jump in?

At last count, in November 2011, there were 97 Groupon clones in the market with 10 players at the head of the pack. Nhom Mua was at the front along with Muachung.vn. The success of Nhom Mua was not just paved by its relationship with Diadiem.com, the leading local location-based web service, but also because of its solution to a still-looming problem in Vietnam: e-payment systems. Nhom Mua adapted to a market that has still not implemented widespread credit card payments by instead using a cash-on-delivery (COD) system.

A recurring theme I’ve been seeing at conferences in Saigon is e-payment is one of Vietnam’s greatest obstacles to growth in the online space. Successful models thus far have ignored the problem by going straight to COD. With Nhom Mua’s recent fall from grace, and the baby Nhom Muas with a fresh market to jump into, it’s only a matter of time before new companies rise into prominence. An increased skepticism of the online space is low on the list of dangers though. With the internet penetration at 34 percent and an increasing portion of them moving into social media, the online market is getting bigger and bigger. Although companies and people may not be trusting of web content, they are learning more and more to be dependent on it.

The problem that these baby Vietnamese Groupons face is a surging interest in e-commerce and what some believe are key fallacies in the Groupon business model. E-commerce provides small and big businesses with access to the same customers, and also bring discounts to consumers. Businesses have also been learning the hard way that discounts on their products are negatively impacting public perception of their goods and services. Whether or not these new group buying players can come into the market, (or Nhom Mua will salvage its reputation) and deal with new business models that are more appealing to businesses, remains to be seen.

Back in Q2 of this year, the top three were a little different – Juhuasuan, Meituan, and 55Tuan – and accounted for 47.5 percent of all deals sold in the country. All those stats come from Dataotuan, which today released its deals report for Q3. Here’s the key pie chart:

The new report shows – apart from serious consolidation at the top – a lot of other details about what Chinese consumers go for. See the embedded slideshow for the full thing. Other highlights include the fact that average price of deal sold is up from 154 RMB in Q2, to 186 RMB (US$29.60) in Q3. That might be partly down to price inflation in China, but deals site must also be pleased that consumers are slowly coming round to buying pricier items on those Groupon-esque sites, such as travel packages. Speaking of Groupon (NASDAQ:GRPN), its official China service, Gaopeng, moved up a meagre 0.1 percent to hold onto 1.8 percent share.

The market leader, Alibaba-owned Juhuasuan, does the best job of getting users to spend more:

Here’s the new report in its entirety:

[Source: Dataotuan]

Mogujie (left) and Mogujia show off their daily deals.

Entering China’s ferocious daily deals sector – where thouands of sites go out of business every year – seems about as attractive as putting one’s head into a hot grill. But Mogujie, China’s top Pinterest-esque social commerce site, is doing exactly that, launching two new channels for deals on clothes and household items.

All the clothing products on Mogujie.com/tuan are – as with the social side of the site – aimed at women. The other deals channel is the similarly-named Mogujia for discounts on household items.

Actually, Mogujia is a spin-off of the startup’s original social pinboard site (started in May of this year), and the newly-launched daily deals are a part of that, at Mogujia.com/tuan. It has group buy special offers on things like bedsheets, furniture, and flasks. Mogujia says it will update its stock of household items once a week, every Wednesday, and that the goods will change according to the seasons.

In contrast the items pinned by users on Mogujie and Mogujia, which have referal links to external e-commerce sites such as China’s Taobao, the Mogujie and Mogujia deals are organized by the company itself in conjunction with various merchants. Though the two deals portals are so specialist, they’re still up against the nation’s top group buy sites, such as Meituan and Juhuasuan. In a loss-making industry where profit margins are well below 10 percent, it’ll be a struggle to make these new channels pay off. But the startup Pinterest clone has phenomenal traffic from its sizable user-base (it was 9.5 million in March of this year), and so its deals sites are given a huge boost from those numbers.

Beijing-based Mogujie announced that it had secured a major series C funding round at the end of last month, which effectively valued the site at $200 million.

[Source: 36Kr - article in Chinese]

The doyen of daily deals, Groupon (NASDAQ:GRPN), opened a new brick-and-mortar store in Hong Kong earlier today. It comes just over four months after Groupon opened its first-ever such “concept store” in Singapore.

The Hong Kong shop, at Soundwill Plaza in the Causeway Bay area, is the same kind of deal, allowing people to pick up pick up certain kinds of products, test out everything that’s on display, and get any kind of customer support. The CEO of Groupon HK, Danny Yeung (pictured right), explained in today’s announcement:

Groupon Hong Kong’s CEO, Danny Yeung. Click to enlarge.

We’ve found many customers prefer picking up their Groupon products as opposed to delivery in Hong Kong, and as a part of our commitment to our customers and the customer experience, the Groupon Concept Store is now launched.

The new Causeway Bay store, which fills out 4,000 square feet of floor space, is opposite Times Square and is open 10am to 9pm daily. It comes a full year after Groupon’s much-deflated IPO; after debuting over its $20-per-share expectation, it’s currently at a mere $2.97 in Friday morning trading.

The store’s opening was hailed with a green-sweatered flash mob dancing on the streets – today and throughout the week. I like to imagine an alcoholic walking past one of these and thinking, “It’s St Patrick’s Day already? Sweet!” Here’s the flash mob video:

Now that Groupon’s (NASDAQ:GRPN) official China site, Gaopeng, is effectively controlled by Tencent, the country’s biggest web company, it’s rumored to be entering into a very interesting and social partnership. According to sources cited by Techweb, Gaopeng will be tapped as the official daily deals provider for Tencent’s (HKG:0700) WeChat app in a future update that’ll see the messaging app introduce local deals.

With a great many of WeChat’s 200 million users being in China (where the app is known as “Weixin”), this Gaopeng integration would mark a major expansion of the Whatsapp-like service in an e-commerce direction. The new feature is rumored to be coming in late November or early December, and will be dubbed “micro group buy”.

Why is Tencent steering Groupon’s Gaopeng into this? That’s because Gaopeng was recently merged with FTuan under the guiding hand of Tencent, an investor in both those deals sites. Now Tencent has a major (but undisclosed) stake in the merged holding company, which is called GroupNet.

The payments infrastructure for WeChat’s rumored new direction is ready with Tencent’s Tenpay app recently updated to accept cash-less mobile payments. It’s not clear if that’ll be needed for WeChat users to purchase deals in the messaging app.

With other messaging apps like KakaoTalk and Line aiming for fun and entertainment, it’d be interesting if Tencent’s WeChat instead took aim at O2O and local deals.

[Sources: Techweb (1) and (2) - articles in Chinese; via Marbridge Daily]

Remember how China’s biggest web company, Tencent, has had a runaway success with its WeChat messaging app? Well, rumors suggest that the WeChat app – known as Weixin in China – is about to get even more useful and become equipped with local deals and discount coupons. This will happen via the acquisition of a company called TongCard by Tencent (HKG:0700), which Sina Tech suggests is a done deal to the point that TongPay operations are already being subsumed into Tencent’s Beijing offices.

TongCard, founded in 2006 by CEO Deng Yu, is a platform for retailers to reach out to consumers via promotions and coupons, and is one of China’s top O2O companies, with mobile apps as well as a massive network of 6,000+ retailers onboard. The TongCard homepage claims that its service has 5 million active daily users.

The rumor suggests that all the TongCard features will find their way into Tencent’s WeChat/Weixin app after the acquisition, bringing all those coupons to the messaging app’s 200+ million users. It’d also see Tencent make a huge leap in its O2O service strength, growing to beat major web companies and startups operating in this space. And so it’d help Tencent and WeChat surpass rivals such as local coupons startup DDMap, or Baidu (NASDAQ:BIDU) with its deals-equipped Maps app.

If the acquisition comes to pass, the TongCard capabilities might be tied with Tencent’s own e-payment system Tenpay, which we know will soon appear within WeChat.

[Source: Sina Tech - article in Chinese]

Just six months after Chinese deals and listings company DDMap attracted $40 million in funding, it has now wrapped up another major round, now series D, that was led by Alibaba Capital, the VC arm of e-commerce giant Alibaba, and CitiGroup’s (NYSE:C) Citi Ventures.

The amount of this new funding hasn’t been revealed, but it’s a major vote of confidence in one of China’s top local and O2O startups. DDMap has daily deals, local listings, and discount coupons for major retailers across China. These also appear in a suite of useful and good-looking apps for iOS, Android, Windows Phone, and Symbian.

DDMap CEO Xu Longjiang said that the funding will also see a stronger partnership with Alibaba – which also owns China’s top e-payments service, Alipay – and that will enable his company to grow faster.

Alibaba Capital’s MD, Zhang Hongping, confirmed the strength of the tie-up in yesterday’s announcement, and said that DDMap is well placed at the nexus of the mobile web and the O2O sector in China.

DDMap’s discount shopping app, DDCoupons (pictured above), now has a claimed 13 million users making user of coupons from 100,000 merchants in 38 Chinese cities. The app has also bolstered its location-based features in recent updates, and now can push relevant deals and coupons to shoppers when they come within three kilometres of partner merchants.

[Source: JFDaily - article in Chinese]

You might recall that in June of this year, Groupon China was merged with larger daily deals rival FTuan into a company called GroupNet. And now GroupNet’s CEO, Lin Ning, has revealed that it has recently netted $40 million in funding. The investment is thought to have been led by Groupon (NASDAQ:GRPN) and Chinese web giant Tencent (HKG:0700), but that’s not confirmed by offiicial channels.

This year’s merger was masterminded by Tencent, which already had an undisclosed stake in Ftuan and was also the official local partner for Groupon in China. As a part of the merger deal, GroupNet also runs Tencent’s own QQ Tuan daily deals site. It’s believed that FTuan – which attracted three major funding rounds already before its amalgamation – still holds the majority of the stake in GroupNet.

The investment is interesting as Lin Ning said that it will be used to acquire some smaller deals sites – so we might finally be seeing some of the tens of thousands of group buy sites in China get a meaningful exit. As opposed to collapsing in financial ruin, which is the way that thousands of them are going each year.

Lin Ning also revealed that GroupNet gets many merger proposals each day, and that the troubled 24Quan – which recently suspended operations – is one target that it might actually go for. Any acquisitions will be a case of buying users, rather than talent, in this overcrowded market.

In figures for 2012 Q2, Taobao Juhuasuan (run by Alibaba, which is is Tencent’s e-commerce nemesis) is the top deals site in China with 21.5 percent market share, and Meituan is a steady second place.

[Source: Techweb - article in Chinese]

One of the first Jakarta Founder Institute graduates, Stilomo.com, which attracted angel investment a few months ago, has finally launched on Android a few days ago. The startup’s daily deals concept is similar to Startup Asia Singapore’s GSpot – get discounts by sharing deals via social networking sites.

Stilomo has worked together with several food and beverage chains in Jakarta such as Old Town White Coffee, OMO! Chicken, and BLD. The founding team, which is comprised of Stanley Octavian, Rebecca Agiestha, and Nicholas Yudha, are hoping to finish an iOS version of their service by early 2013. They are busy finalizing the mobile website right now too.

The daily deals business model has been used by so many startups in recent years that cloning it is no longer good enough. Now we are looking at a surge of startups trying to put some twists on their deal offerings, such as seen with Indonesia’s Uluyu, India’s FreeCharge, and China’s Handsup. Will Stilomo be able to outshine the rest of its competitors with its social approach? Let’s wait and see.

You can download and try the brand-new Stilomo app for Android here.

[Via Inageek.com]

The 24Quan site is now offline, replaced with a statement that says, in both Chinese and (for some reason) English:

24Quan's homepage, before it suspended operations today. Click to enlarge.

Due to misalignment of interest and ideology differences between previous shareholders and management team of 24Quan, as producer of 24Quan’s service, and taking into account of the interests of all those whom we loved and cared, our website will enter into a period of “temporary excursion”. As a result, regrettably we will not be able to offer your service in the upcoming few weeks. We hope to resume our service after we resolve our matters with our shareholders.

The site then offers a customer service telephone hotline. The wording of the statement doesn’t mention financial difficulties directly, but it’s likely that cashflow issues – or even crippling debt – are at the heart of the apparent tension between the unnamed “previous shareholders” and the deal site’s management.

Things once looked rosy for 24Quan. In market share stats for October 2011, it rose to become China’s fifth-biggest daily deals site, with six percent of the industry’s revenue for that month. But, in this fierce sector characterized by tiny profit margins and huge marketing spending, it’s likely that 24Quan was burning through cash – or piling up debts – in order to grab share in the market. But by the time of figures (from the same source) for 2012 Q2, 24Quan had crashed to 19th place with a meagre 0.6 percent market share.

In late November, 24Quan CEO Du Yinan responded to our afore-mentioned article about layoffs and debt, and told my colleague that he was, even back then, struggling to make “transformative changes” to the site. It’s not clear what those were, since it continued to plough on as a fairly conventional deals site long after the first reports of its business being in turmoil. He said the site was seeing “in excess of [US]$12,000,000 of cash turnover – every month” at that time.

Groupon-clone deals sites have been pulverized in huge numbers, like so many mosquitoes in the night, in the past couple of years. Indeed, in just the first six months of this year, 2,859 such sites have closed. Perhaps 24Quan can be added to that deadpool, if it doesn’t reappear online as promised within a few weeks.

Daily Deals site Groupon, with a shop in Singapore

It’s funny the reactions I’ve gotten when I’ve told people in the tech community that I’m in the ‘daily deals’ (a.k.a. group buying) industry. Generally I get a disinterested reply of “oh, I see” or sometimes even a very blunt “why?” Sure, Groupon’s stock price is flailing at around US$5 and the tech press is now seemingly “over” daily deals since it has stopped publishing stories bashing it.

It’s true that daily deal sites are the epitome of the copy catting gone wild which has plagued the Asian start up scene, however I think the tech community will look back at 2012 as a watershed year for e-commerce in Asia. So where have global e-commerce stalwarts like Amazon, eBay and others fallen short in Asia and how has daily deals filled this void?

1. Daily deals has changed consumer’s attitudes towards shopping by giving them a reason to go online.

Many consumers in regions like Hong Kong, Singapore, and even Thailand look at brick and mortar shopping and mall walking as “shoppertainment.” Hong Kong has always been a head scratcher for e-commerce having a high smartphone penetration (third highest globally per capita), a large consumer segment with available spending income and a high broadband penetration. However it greatly lags China in e-commerce growth with a paltry projection of 7 percent annual growth rate [1].

Daily deals sites have brought Asian consumers online simply because of the great discounts. Consumers go through the “inconvenience” of going online and have gotten over their distrust of buying a virtual good in the form of a deals voucher. What’s more they’re taking the risk of pre-paying for a product or service from mostly unknown merchants without even seeing it! Daily deals is only two years old and already the Hong Kong and Singapore daily deals markets are estimated to be worth between $60 to $70 million annually while Thailand, Malaysia, and the Philippines are in the $25 to $40 million range [2].

2. Daily deals sites instituted “no questions asked” risk free shopping.

Hong Kong's BeeCrazy

One of the obvious challenges of curating deals from merchants and brands is quality control. It’s the hazard of acting as a channel for sometimes unknown merchants to peddle their wares to your customers. As painful as it sometimes was, deal sites provided refunds to customers who complained about anything from a restaurant running out of a lunch set deal the day they patronized the establishment to the merchant themselves going bankrupt and skipping town.

This was the case for Groupon Hong Kong and BeeCrazy who were left holding the bag when Macao Dragon Ferry went under (over 150,000 vouchers sold). Deal sites quickly recognized the power of word of mouth and the importance of preventing churn of a customer to a competitor with a seemingly identical smorgasbord of deals.

3. A pathway for e-commerce to reach the masses.

Daily deals democratized e-commerce by making a multitude of payment options available so that the non-credit card demographics could shop online. For example, in the Philippines there are only roughly seven million credit cards and three or so million credit card holders. The numbers are even less for Thailand and Indonesia. In fact only 5 percent of online Indonesians engaged in e-commerce or online banking, with credit cards being one of the main roadblocks [3]. Over-the-counter payment, ATMs, and online bank transfers are much more the norm for Southeast Asia. Deal sites also offer Cash on Delivery for the most cautious of consumers.

4. A new direct marketing channel for SMBs: the introduction of hyperlocal commerce.

So far I’ve focused on the consumer side of the equation. Daily deals has given local merchants a relatively risk free, pay for performance marketing channel. I say “relatively” because in the early days some merchants were not coached properly on how to manage capacity for deals and were swamped by a flood of redemptions for loss leader deals. Since then, they (and the deal sites) have become much more savvy at pricing and structuring deals so that there is an opportunity for up-selling for a profitable customer acquisition as well as converting a new customer to a returning one.

So where does the industry go next? Lack of congruent payment infrastructures and economical delivery and fulfillment solutions will continue to be a challenge for e-commerce in the near term. Mobile is the obvious next step but it’s one that requires getting a few very important things right.

• Utilizing the context of mobile (location, phone type, time of day, etc.) to drive discovery of deals and effective re-marketing.
• Utilizing the phone as the vehicle for payment. Much has been prophesized about this (think PayPal, Square, carrier billing, NFC, mobile wallets) but the key is to get the app and mobile site experiences right first. This means a super convenient and secure process involving single sign on, mobile optimized payment page flows that are UX tested and then re-tested. Shopping cart abandonment recognition and re-marketing tactics will be key because 3G is not yet reliable in SEA and consumers’ attention spans on mobile vary depending on where they are.
• Utilizing the phone as the tool for redemption. The first step is getting consumers and merchants to adopt a simple system to scan and validate a voucher that’s brought into the store on a phone.

Yes, the press has prophesized about more and more consolidation to come for the daily deals biz. Ultimately daily deals will take a different form. Sites are already trying to morph into full-fledged e-commerce store fronts. The next inflection point will come as large entrants like credit cards as well as web Goliaths like Google and Facebook come to market with a deals/offers experiences integrated into their primary use cases.

In any case, daily deals is not a one trick pony. So look for even more to come!

From October 2011 to the end of June 2012, Lashou has lost 55 percent of its market share by revenue. Briefly China’s number one daily deals site at the end of the third quarter of last year, it has now sunk to sixth place in the country according to our favorite source of local deals analytics, Dataotuan. We know the IPO is off, but how about funding? It’ll be difficult to persuade investors with that kind of track record over the past year. Being China’s sixth-largest daily deals site is a bit like being an aging hooker – everyone knows you’ve been through a lot, and many will wonder if you’ve got the brains to get your life back on track.

Here’s the grim Lashou landscape [1] over the past year, contrasted with the current market leader, Meituan:

Of course, some are having it worse in China’s rough and very fragmented group buy/deals market. Nearly 3,000 daily deals sites have shutdown in the past nine months. And other former luminaries have crashed much harder. Look at poor 24Quan. It has gone from a peak of 8 percent share in October 2011 to – brace yourselves – 0.6 percent in the most recent 2012 Q2 stats. You can practically imagine the company face-planting. Yes, the figures in this sector can be volatile, fluctuating wildly; but that is catastrophic. It wasn’t too much of a surprise, though, as the 24Quan CEO spoke to us at the end of last year about its “restructuring” – giving us a sense of unease that the whole venture was in trouble.

As for Lashou, how long can that go? Where’s the diversification, the pivot? Or the fightback. Right now, Lashou is clearly on the decline, and its market share is back almost exactly where it was last June.

The Chinese Yelp-like site Dianping has once again hit the jackpot, pulling in, it has announced, “over $60 million” in series D funding. It’s less than the company’s third round of $100 million in April of last year, but it’s still a huge boost as the city directory site also has a growing daily deals business – and that’s a very fragmented market that relies on heavy ad spending.

The new Dianping funding news was tweeted out by the company on its own Weibo page (see it here). Dianping says it will use the new round to focus on its mobile business, as well as general biz development.

In its previous round, those who took part were Trust Bridge Partners, Sequoia Capital, Qiming Ventures, and Lightspeed Venture Partners. It’s not known exactly who led this newest round, but we’ve reached out to Dianping HQ to see if they can comment on that. [UPDATE: nope].

Just yesterday we looked at the latest stats for China’s daily deals industry and saw that Dianping has grown to become the nation’s fourth-largest group buy site in terms of market share. It took 8.3 percent of revenue in the sector in 2012 Q2. Dianping has been already pushing its mobile commerce, and recently revealed what its Android and iPhone users were buying.

Last year we chatted with Dianping’s VC, Michael Jiang, at an event in Beijing. You might like to see that video here.

The stats once again come courtesy of Shanghai-based Dataotuan, whose new report has some other alarming figures. For example, the number one deals site in China is Taobao Juahuasuan (run by e-commerce giant Alibaba); it sells 57 percent of all product-based deals (as opposed to, say, dining deals) in the country, more than all of its rivals combined:

Taobao Juahuasuan hasn’t always been included in such reports in the past as it’s also an aggregator of deals, which complicates the picture somewhat. Nonetheless, if included it clearly becomes the largest such site in China with 21.5 percent market share. Meituan remains the most successful of the startup sites that came out of nowhere after deciding to emulate Groupon’s model. And what of the newly-merged Groupon (NASDAQ:GRPN) China site, Gaopeng.com? It still lingers down in tenth place with a gradually shrinking market share:

But if we look at Meituan’s average sold deal price, it’s the lowest among the leaders, with its customers paying a mere 113 RMB (US$17.87) per deal, way below the average payment per transaction in the country. The two strongest in this respect are Dianping and Juhuasuan, on which its users spend over 200 RMB ($31.65) per deal:

Head over to the link below to see the 23-page slideshow of analytics in full.

[Source: Dataotuan blog]

Chinese daily deals and local reviews site Dianping has compiled stats about its mobile app users for the first time, showing a lot of interesting contrasts between its iPhone and Android user-base. In summary, Dianping’s iPhone users tend to spend a lot more and seek out luxury, while its Android app users are cheapskates [1]. Not the exact wording of the company, but that’s what it amounts too.

Although there might be some overlap in demographics between the two platforms, the two camps of users clearly spend differently on Dianping, and tend to search for very different leisure activities too. Firstly, looking at the respective rates of expenditure on Dianping’s deals, you’ll see that a sizable 23 percent of iPhone users spend over 200 RMB (US$31.70) per order/deal, in contrast to just 12.55 percent via the Android app. Overall, Android users are most likely to spend just under 50 RMB ($7.93) per deal, while iPhone fans will tend to spend over 80 RMB ($12.68):

In terms of consumer preferences shown in searches made within the Dianping apps, Android users once again go budget, searching for cheap eats and entertainment like KFC, street BBQ, and internet cafes. Those on iPhones, in contrast, searched for pricier places like nail salons, petrol stations (indicating sizable car ownership), and specialist restaurant chains like Pankoo for authentic Korean cuisine. If you read Chinese, that graphic is here.

But iPhone users in China are not always so generous, especially when it comes to apps. Earlier this week we looked into a report that showed Chinese iOS app developers were earning a worldwide low of just $0.03 per download.

Despite the tendency of Android users to spend less on services, it’s now a crucial mobile platform for all Chinese web businesses to support. Figures for the end of 2011 show spectacular Android growth in China so that it commands 68.4 percent of mobile OS market share – way above iOS’ tiny 5.7 percent.

[Source: Dianping blog - article in Chinese]

New statistics for China’s group buy market show dramatic drops in monthly transaction volume and value. The latter plummeted 23 percent from the May figure to hit 2.08 billion RMB (US$329.4 million) in deals sales in June. As for the transaction volume, that sunk to a year-long low of 38.38 million orders in June, which was down 26 percent from May.

Although the monthly drops could be seasonal – with folks perhaps moving away from daily deals as the school summer vacation kicks in in mid-June – it is very significant that the sales volume reached a year-long low, dropping below the 40 million mark for the first time in 12 months.

Consumers in Shanghai caused the biggest localized fall in deals in the whole country, as group buy transactions in the city halved from 140 million RMB in May to just 72.85 million RMB ($11.54 million) in June. That was the first time in 12 months that the figure had dropped below 100 million RMB.

The statistics come from Letyo.com, a local deals aggregator. It also noted a substantial fall in deals sold in the capital, Beijing, where transaction value fell 35 percent in June from the previous month.

As for the key players, Letyo noted that two of China’s biggest web portals maintained their lead in daily deals. Alibaba’s Taobao Juhuasuan (pictured above) remains a giant deals aggregator and the industry’s most-used service with a monthly transaction value of 970 million RMB in June. Yes, that’s effectively 46.6 percent of all sales in the whole sector in China. Tencent’s (HKG:0700) QQTuan was a strong yet distant second with 160 million RMB in sales. The independent deals sites are led by Meituan.

If last winter was thought to be harsh for group buy sites, then this year’s coldest season could well be even rougher. With insane numbers of small sites still fighting over the scraps, we’ll likely see even more close down this year than last – when over 2,000 deals sites shutdown.

[Source: Donews - article in Chinese]

Groupon COO Adrian Tan and CEO Karl Chong at Groupon's ribbon cutting ceremony

As we reported two weeks back, Groupon Singapore officially opens its world’s first Groupon retail store in Singapore’s Suntec City Mall today. Groupon COO, Adrian Tan, explains that the first shop – dubbed a “concept store” – will actually serve a practical purpose, and hopes it’ll help to deliver better service and greater interaction with its shoppers.

In an official press statement, Groupon (NASDAQ:GRPN) makes clear this is also meant to be a test-bed. Should this idea be successful, it will be adopted in other markets that Groupon is currently in.

Apart from allowing customers to pick up the products they have purchased from the site, the shop aims to create a Groupon ecosystem within the store – where iPads are provided to allow shoppers to browse, purchase, print, and redeem their daily deal coupons instantly.

Groupon customers dressed in green to support launch of the first concept store

Adrian elaborates:

Although many Singaporeans like to go online to purchase deals, many still prefer the face-to-face interaction and the fact that an online shop like Groupon has a physical presence. We want to offer the best of both worlds – both through our website and mobile apps for those who demand online convenience; supported by the Shop where customers can go and see our Groupon goods as well as talk to a Groupon ambassador face-to-face.

Karl Chong, CEO of Groupon Singapore, adds:

Our customers are the heart of everything we do at Groupon, and we strive to deliver better service and an enjoyable environment for them. Whether it be collecting or purchasing items or even getting in touch with one of our Groupon Ambassadors to learn more about Groupon, the Groupon Shop will help make deals on Groupon Goods more accessible to everyone.

For interested folks out there, the Groupon Shop is open from 11:00 am to 8:00 pm daily, and is located at Suntec City Tower 3, #03-27 G-L (at Cinema Level).

In addition to all that, Meituan’s VP, Wang Huiwen, has said that the site expects to become profitable by the end of the year. That’s quite a claim in such a fragmented market where gross profit margins are so low. Meituan’s margins are, the company claims, between 8 and 10 percent.

Here are Meituan’s monthly (unaudited) sales figures for the whole of this year so far:

[Source: Techweb - article in Chinese]

Exactly as we’d heard was about to happen in recent rumors, it has just been announced officially that Groupon’s (NASDAQ:GRPN) joint-venture in China with Tencent, called Gaopeng, will merge with its larger daily deals rival FTuan.

The whole deal was overseen by China’s web giant, Tencent (HKG:0700), which not only owns half of Gaopeng but also has an undisclosed stake in FTuan. The financial deals of the merger have not been revealed. Groupon will be a minority shareholder in the new company, as it was in Gaopeng – but we’re not sure how “minor” it now becomes.

The merger will create a new company that’ll be headed by FTuan’s CEO, Lin Ning, but means that the two Gaopeng and FTuan brands and websites will continue as they are.

In this evening’s announcement, the new entity’s CEO, Mr. Lin, said:

China’s daily deals market is moving from investment-driven to operation-focused, and I believe the merger will position us well to further scale our operations and deliver innovative products to our customers. The multi-brand strategy after the merger will enable the new company to serve the segment needs of merchants and consumers in lifestyle e-commerce and mobile internet.

It is indeed the first major deal we’ve seen in China’s fragmented and costly daily deals market, where the current market leader is the startup Meituan. FTuan was in fourth eighth place last time we looked, while Gaopeng was still losing market share way out of the top ten.

Tencent’s new CEO of its recently spun-off e-commerce division said:

The new joint entity will combine the strengths of FTuan and Gaopeng to better serve consumers in the daily deals market in China. We believe group-buying is a natural leverage off our large user base.

Meanwhile, Groupon’s Jason Harinstein, commented:

For Groupon, this transaction is the next logical step in our strategy to strengthen our investment in China. Tencent has been a great partner, and we are excited to continue our partnership with them. We are also looking forward to working with the FTuan team to provide Chinese consumers and merchants with more compelling offerings.

As some had expected would happen, Groupon Singapore will be launching Groupon’s (NASDAQ:GRPN) first-ever retail store on July 4, according to an official announcement from the company (in the form of a media invite to the opening). It’ll be strategically located in the Suntec City Mall (pictured above).

Our blogger saw a man with this bag on the MRT this afternoon, proving that the Groupon Store in Singapore is already open after a soft-launch last month.

With the launch of the new Groupon Shore, it aims to connect better with Groupon fans by bringing the deals to the physical store itself. And having it located in Suntec, which is in the heart of Singapore, makes it even easier for Singaporeans to visit the store.

But, as our friend Jon Russell from TNW points out on Twitter, ZDNet noted the opening of a Groupon store in that mall a few weeks ago. In retrospect, that seems to have been a soft-launch, and this July 4th event will be the proper launch.

Aside from that confusion, what comes to mind, however, is why? Why is this a good move for an e-commerce company that generally has low overheads? No doubt having a physical store allows you to have the personal touch and puts a face to the Groupon name. But I wonder what more this first Groupon store entails. In fact, within the e-commerce space in Singapore, popular blogshops such as tracyeinny and MDS have also set up physical shops to perhaps connect better with their customers. But their prices are seemingly more expensive too.

I guess we’ll be able to find out more when we attend the launch this July, to speak with Karl Chong and Adrian Tan, CEO and COO of Groupon Singapore, who will be present to open the store.

[UPDATE on June 22nd] Groupon Singapore has asked us to point out the following:

To celebrate Groupon’s brand new Groupon Shop launch, Groupon is giving away S$50 vouchers to the first 50 visitors dressed in green. Details below:

Date: Wednesday, 4th July 2012

Time: 11.00am to 9.00pm

Venue: Groupon Shop, Suntec City Tower 3, 03-27 G-L (at Cinema Level)

See you there!

The long-running saga over the fate of Gaopeng, Groupon’s (NASDAQ:GRPN) joint-venture in China (with Tencent) is not over yet, with the most recent rumors today suggesting that a business merger between the troubled Gaopeng and FTuan is imminent. Reports in Yi Cai say that FTuan – which is a top eight deals site in China, way ahead of Gaopeng in terms of revenue – will merge with its rival to form a new group which FTuan’s CEO, Lin Ning, will oversee.

The Deus ex machina here is the local web giant Tencent (HKG:0700), which owns half of the Gaopeng business as a joint-venture partner, and has an undisclosed stake in FTuan as well. It’s believed that Tencent will ultimately control half of the group that will form out of this rumored merger. That gives Tencent even more clout in the group buy space (in addition to its dominance in social media and gaming in the country), since it also has its own QQ Tuan and Soso Tuan deals aggregators.

This move would see both the Gaopeng and FTuan brands continue to exist. Market data from 800Tuan states that the two sites have different demographics of users, with Gaopeng’s being more upscale and more likely to spend a greater amount of money on deals. And so the two can co-exist in a complementary fashion. Our most recent report on the Chinese group buy landscape saw FTuan retain a fairly strong 6.3 percent market share by revenue in a highly fragmented and competitive sector where costs are high – especially in terms of marketing – and profit margins are low.

[Source: Yi Cai - article in Chinese]

Ooops!

One of China’s top daily deals site, Lashou, prides itself on selling attractive deals to its users. But its biggest ever deal – a bid to list on NASDAQ – couldn’t find many enthusiastic takers, and now the company has withdrawn its IPO filing at the US SEC.

Lashou has instead made a new filing that is a request to withdraw its earlier submission – find it here – and which effectively cancels all plans to head towards an IPO in which it aimed to raise $80 million. The short document asks for consent to cancel the first “application on grounds that the withdrawal of the Registration Statements is consistent with the public interest and protection of investors.”

Indeed, with a black mark next to the names of many Chinese young tech stocks since the Longtop scandal of last summer, and with ongoing concerns about revenue models and transparent accounting – see the Citron attacks on Qihoo (NYSE:QIHU) – Lashou always faced a battle to get an underwriter to sell it to investors.

Lashou has settled itself in as one of China’s top daily deals sites, taking 8.9 percent market share in a very fragmented industry in China. But that stat is down from late last year, when Lashou commanded 12.7 percent market share and looked set to become the nation’s largest group buy site by revenue. But these days it’s in fourth place.

A local newspaper in China recently accused Meituan, the country’s largest daily deals site, of fraudulently inflating its transaction volume figure by a factor of three. That has prompted Meituan’s management to refute the accusation, and reveal that the website handled 360 million RMB (US$56.54) in orders last month, May, alone.

The newspaper had said that Meituan was directing employees and friends and families of its merchants to place orders which they’d later cancel after the deal had expired and thereby get issued a refund. This, the report alleged, was trumping up monthly sales transactions from a true 100 million up to 300 million RMB.

Meituan’s VP, Wang Huiwen, told Chinese media that all’s well at the group buy market leader, despite the fact that it has ceased city-by-city expansion for the time being until it becomes profitable. The figures he revealed give an interesting glimpse into life in the cut-throat, low-margins business. He added that in May, the company refunded 38.47 million RMB ($6.04 million) to customers who had failed to use their purchased deals, representing nearly 10 percent of its sales. With all that factored in, Meituan’s gross profit margin is between 8 and 10 percent.

It’s plausible that some smaller companies in this group buy space struggle to survive on even slimmer profit margins. That explains why hundreds of such sites are shutting down each month.

[Source: Marbridge Consulting]

Groupon’s (NASDAQ:GRPN) daily deals site for China, Gaopeng, which is run as a joint-venture with Tencent (HKG:0700), looks like it is a pawn in the upcoming restructuring of Tencent’s group buy operations. New rumors say an internal email from Gaopeng has told staffers that Tencent’s deals site, QQTuan, will stop being an aggregator and instead feature only offerings from Gaopeng and its outsourcing partner FTuan. Further to that, a Gaopeng executive is believed to have said that the Groupon subsidiary will be acquired by FTuan, with an assist from Tencent selling its stake in the joint-venture.

Clearly, there’s a possible contradiction in those whisperings floating around the Chinese e-commerce industry – if Gaopeng is made extinct by Tencent divesting itself of its share and then it’s acquired by FTuan, then the first rumor doesn’t make sense. But Gaopeng might continue to operate under FTuan ownership.

Note that Gaopeng is a very minor player in China’s deals industry. When we looked at market share stats for January, we saw that Groupon’s venture had slipped to 14th position, losing half of its already small market share since last August (from 4.2 to 2.1 percent). Tencent’s outsourcing partner, FTuan, which runs all the deals on the QQTuan site, was in 7th place.

Marbridge Daily summarized the situation by writing:

An industry source told Sohu IT that Tencent will trade its stake in Gaopeng to FTuan in exchange for a share in FTuan of equivalent value, based on Gaopeng’s current valuation. Tencent and Gaopeng have also reached an agreement under which Gaopeng will become an investor, and will be replaced by FTuan in the control and operation of the company.

These stories have been rumbling on for weeks, but if it’s true that Gaopeng staff have been informed orally by executives that an acquisition is imminent, then we might finally see an official conclusion to this – and see if Groupon/Gaopeng as a brand will even survive in China.

On a related note, Gaopeng’s CEO, Yang Chengjian, submitted his resignation to the board last week, citing personal reasons. The leadership role is passed to Gao Xia.

[Sources: Marbridge Daily 1 and 2]

Chinese online city listings company DDMap has today revealed a new and sizable round of funding. CEO Xu Longjiang, talking to Chinese media, said the financing was worth US$40 million and was led by US-based CID Capital and China-oriented F&H Fund Management.

Much of DDMap’s business is actually in local promotions via its mobile apps DDCoupons, DDLife, and the newer DDCheckins. Therefore, Xu Longjiang says that much of the funding will go towards investment in its smartphone apps and this “local lifestyle” and discounts sector. For example, through partnerships with venues in over 40 Chinese cities, users of the DDCoupons app could get an immediate in-store discount of, say, 20 percent without the need for printing a voucher or anything.

The Shanghai-based company was started up in 2005 and has received funding in the past from HTC (TPE:2498) in a $9million round, and also from Morningside Group and KTB Ventures before that.

In addition to its mobile internet business, DDMap has a daily deals portal, and online maps and local bus routes. It’s up against local promotions from the likes of the startup Buding, as well as major group buy and review sites such as Dianping.

Check out the DDMap apps on its homepage.

[Source: QQ Tech news - article in Chinese]

There’s a new trend in the e-commerce and group buying – aka: daily deals – space in China for former rivals to work together, outsourcing a part of their business to another site that has great expertise in that area. It’s complementary, efficient – and quite unexpected; a tacit admission that the industry is both vicious and exorbitantly expensive, with intense pressure to cover every product area in a manner that most sites cannot realistically maintain.

An insider in the business, who’d like to remain anonymous, has told us that consolidation will only accelerate this year in China, with new partnerships and outsourcing deals even among major B2C e-commerce or group buy companies. Baidu (NASDAQ:BIDU) knows the risks all too well, with the failure of its joint-venture with Rakuten just last week. We’ve already seen four pretty large tie-ups in this area, with one other rumored to be about to take place. These are:

Dangdang + Gome

E-commerce site Dangdang (NYSE:DANG) recently decided to work with Gome (HKG:0493), the big-box electronics retailer which is trying to shift more of its business online, to set up a store-within-a-store on Dangdang.com that would sell much of its range of gadgets and home appliances. As part of the deal, Gome will promote its Dangdang storefront as well as take care of after-sales servicing. (Press release).

Dangdang + Jiuxian

Earlier this week, Dangdang opted to outsource its alcoholic beverages portal to the expert drinks retailer Jiuxian.com. Similarly with the Gome tie-up, it means that Jiuxian will take care of all the liquor that Dangdang’s customers order in terms of shipping and after-sales. (Read more on ChinaTechNews).

55Tuan + Ganji

Meanwhile, in the local group buy industry, the classifieds site Ganji recently ceded control of its deals portal (where it’s a very minor player) to 55Tuan, which has now risen to be China’s second-largest deals site. Though a relatively small bit of outsourcing, it’s indicative of how this path is chosen rather than Ganji abandoning that non-core part of its business. (Read more on BusinessInsider).

360buy + 55Tuan

This would be a major one, though for now it’s a rumor. Essentially, as we outlined last week, 360Buy – which is the country’s second-largest B2C e-tailer – might try to outsource its group buy portal to 55Tuan so as to save on costs on that aspect of its non-core products.

Tencent’s QQTuan + FTuan

Web giant Tencent (HKG:0700) has entrusted its QQTuan deals aggregator to be run by FTuan, one of China’s top ten group buy startups.

It’s not just happening in e-commerce in China. Video-streaming sites in the country – another highly competitive yet fragmented sector – are going through a major shake-up as well. First there was the bombshell of a merger between Youku and Tudou, the two top players; then just this morning, three smaller video sites formed a strategic alliance for buying movie and TV show rights, and they might work together on social elements of their sites as well.

And so the online retailing industry in China could see a major acquisition or two – but consolidation via outsourcing and partnerships seems to be the path that many more will follow. That’s because they lack the funds to acquire a rival, but need to work together in order to survive.

There’s a rumor in China’s online retailing industry that 360Buy, the country’s second-biggest B2C e-commerce site, is seeking to outsource its daily deals business, perhaps to 55Tuan or Lashou.

The rumor suggests that 360Buy is not looking to get out of daily deals per se (which is but a small part of its overall offerings), but might instead be wanting to outsource the localised elements of the labour-intensive business. Apparently the company has approached a number of group buy sites who might make good outsourcing partners, though only 55Tuan and Lashou have been mentioned by name.

The last time we looked at market share among deals sites, we saw that 55Tuan had 11.8 percent of the market (for February 2012) in terms of total revenue, putting it in second position behind only Meituan with 15 percent. Lashou, meanwhile, has been on a bumpier course of late, and is now the fourth-largest deals site in China.

55Tuan’s co-founder is Singaporean James Tan, who spoke at our Startup Asia event earlier this year, where he revealed that “every day we transact more than $1 million.” We’ve reached out to Mr. Tan and will update if he’s able to comment.

360Buy’s deals portal (pictured above) is currently running in only 21 major cities across China, making it much shorter in reach than all the leading deals sites.

[Source: Sina Tech news - article in Chinese]

While most of the far-too-numerous daily deals sites in China are going through a rough time, the woman-oriented group buying website MaiHao has today announced that it has secured some major investment funding.

The VC backing amounts to US$5 million, coming mainly from the Washington-based ICI an unidentified US investment firm. MaiHao’s CEO and co-founder, Hong Miaolong, hasn’t explained to the media how the funding might best be spent or invested.

[UPDATE on March 3rd - After checking with ICI, it is not the source of the investment funding, and seems to be a mistranslation on my part. The local media seems to identify only an unspecified US investment firm].

The MaiHao site – at 17mh.com – sells discounted deals on products such as make-up, skincare products, and clothing. The company guarantees that all its branded products, such as Clinique and L’Oreal, are genuine items, which can be a serious issue on some group buy and e-commerce sites in the country. There are plenty of other deals sites taking a similarly specialist approach – in terms of focusing on women and a certain genre of products – such as Rakuten China’s group-buy portal which is a joint-venture between Rakuten (JSD:4755) and Baidu (NASDAQ:BIDU).

The timing for the MaiHao funding news is pretty apt, as today is International Women’s Day.

[Source: JRJ Finance - article in Chinese]

When we looked at the most recent stats last month for the group-buy market in mainland China, we noticed some interesting phenomena, such as the top three sites – Meituan, 55Tuan, and Lashou – now look like an established hierarchy, and movie tickets were the hottest leisure deals.

And now the source of those stats, the aggregator and deals analysts DaTaoTuan, has made an infographic showing why movie coupons are such an important differentiator for a daily deals site, potentially bringing in over half a million sales worth over 10 million RMB (US$1.58) to a single company. Movie ticket deals now account for 13.4 percent of all revenue in the mainland China group-buying sector.

In summary, before looking at the infographic below, it seems that Meituan and 55Tuan are making the biggest piles of celluloid-derived cash, with Meituan bringing in 13 million RMB ($2.06 million) in the space of nine days with its movie deals across 44 Chinese cities. The infographic astutely points out that cinema tickets are way expensive compared to the usual pirated DVDs here – like, 70 RMB tickets versus 7 RMB discs – so big discounts are proving to be a great way for deals sites to bring in new customers and reconnect with old ones as well.

[Source: DaTaoTuan’s blog]

Group-buy aggregators and analysts Dataotuan are back in action, tracking 125 deals sites throughout January to find the latest trends among consumers in China, and to see how the sites themselves are performing.

In summary, this time around we observe that movie ticket deals are a new craze among buyers, Groupon’s (NASDAQ:GRPN) Gaopeng.com is failing and flailing, and for the first time we meet some shopping-only deals sites, such as Xiutuan, that avoid the usual array of restaurant offers. In the broader market, we finally see some stability as the top five sites, led once again by Meituan, retain their positions.

Here are some of the key slides from Dataotuan’s newest monthly report:

Market Share in January

After more than a year of tumult in this group-buy sector, we now see a clear hierarchy, led by Meituan and 55Tuan, just as it was at the end of December. Meituan is indeed consolidating its lead.

Look down to 14th position on the pie chart to find Gaopeng, Groupon’s official venture in China. Its market share slid slightly once again; now at 2.1 percent, it’s down from 3.2 percent last October, and has been cut in half since its 4.2 percent share of the pie last August.

Number of Deals Actually Sold

The number of deals that are actually sold is, of course, a good indicator of their quality. In this respect, the two market leaders show that they also offer attractive deals. In this area, we almost always see strong form from Dianping and the Renren-invested Nuomi, both of which always seem to know what their customers want. You’ll note that Gaopeng was offering a lot of deals, but it – once again – failed to turn that into a large number of sold items.

Movie Tickets in Demand

Movie tickets deals are now – excuse the pun – a hot-ticket item on many deals sites, growing to now account for 13.4 percent of all revenue in the mainland China group-buying sector. It is therefore the largest subcategory of leisure purchases.

Shopping Deals

The report covers, for the first time, shopping-only deals sites, which tend to sell stuff like make-up, watches, clothes and accessories, and not items like restaurant deals, holidays, etc. And so we encounter some new names: Xiutuan.com seems to be the market leader, though this market is clearly less stable and it fluctuates each month. Tuanxiu seems pretty solid as well. But this sector does have a few recognizable names, such as the Walmart-invested Yihaodian, and the cosmetics-oriented Miqi, which last year attracted some VC funding. Both those are mainly conventional e-commerce sites which also do daily deals on the side.

Check out the full report as a slideshow at the source link below.

[Source: Dataotuan’s blog]

Unlike the common group-buying websites in China, Handsup.cn has an interesting new spin. It is the first domestic site that allows consumers to request deals. Seeing goods or service which they want, users can create and promote their own deals, turning a local business’s customers into its biggest advocates. It will be interesting to see if it’s successful.

According to Handsup, it takes just three steps for consumers to request a deal:

1. Find an item that you’d like to buy. Other e-commerce sites like Taobao or Amazon China can be used for ideas.

2. Submit the idea along with a photo, pick a realistic discount amount, and add a deal description. Here it goes through a review process behind the scenes. If the deal is approved, you will see it in action on the site. Now you can wait for it to gain traction, or rally people to sign up for the deal by sharing it online.

3. Again behind the scenes, if enough people are interested in the idea, Handsup reps will contacts businesses with the details, and if a business approves it, the deal is on. Now you can buy it with a nice discount – such as the USB-powered speakers pictured below that come with a 35 percent discount.

The more people 'hands up' a deal, the greater the discount will become.

The advocator of the deal will get a reward of 100RMB for each deal that goes on sale, no matter if he or she buys it.

There are three levels of price for each deal (pictured above); the more people vote – or ‘hands up’ – the deal, the greater the discount could become. This is how Handsup inspires social sharing and word-of-mouth marketing in its innovative group-buying model.

This consumer-to-business (C2B) model – in contrast to the usual B2C on the likes of Meituan and Lashou – is so new in China that nobody knows whether it will be success or not. Liu Lei, one of the founders of Handsup, says that his website offers a stronger deal alternative than those normal group-buying sites, and lower prices as well.

Currently, the items on Handsup.cn range from clothing and gadgets, to food and cosmetics. Its revenue model is more traditional, though – getting a cut of the daily deals that are bought by its users.

[Source: Tech2IPO - article in Chinese]

China’s second-largest e-commerce site, 360Buy, continues its very aggressive expansion today with the launch of a hotel booking site. It’s quite a break away from the company’s usual focus on books, electronics, and clothing, and is a significant threat to the country’s main travel services, Ctrip (NASDAQ:CTRP), Elong (NASDAQ:LONG), and Qunar. The B2C e-commerce site started selling plane tickets last summer, and so now it has augmented its offering to the point that it has a fully-fledged travel service.

The new portal, at hotel.360buy.com, also includes discounted daily deals on hotel bookings, making this something of a challenge to the country’s leading group-buying sites, Lashou, and Meituan.

360Buy said in a press release accompanying the launch that is has 20,000 hotels on the new site, across mainland China, Hong Kong, and Macau.

In recent months we’ve seen the company make acquisitions, plan to open an e-book platform, and launch a luxury brand clothing store. It’s all a part of 360Buy’s stated aim to expand well beyond its initial product range and challenge Alibaba’s Tmall.com, the current market leader, for top spot in China. It may seek to IPO in the US, if economic conditions improve, in 2012.

Despite a tough year for many group buying sites in China – including lots of terrible publicity such as huge spikes in customer complaints – lots of consumers turned to such deals sites for their most important event of the year: Chinese New Year dinner.

The deals aggregator Tuan800 has revealed that in China’s 10 biggest cities, people snapped up 734 ‘Year of the Dragon’ dinner deals that sold 54,000 times, amounting to a total of 2.97 million RMB (US$470,000) worth of festive food. That represents growth of 940 percent since the last Chinese New Year back in 2011.

The holiday period as a whole saw even larger group buying stats, as people bought about 11,000 deals that sold 1.83 million times to a total value of 65.92 million RMB ($10.4 million). And remember, that’s not the nationwide figure; that covers only 10 large cities. For the grandest of totals, Tuan800 claims the entire deals sector in China saw 11 billion RMB ($1.74 billion) in sales in 2011.

Meituan.com and Lashou.com emerged as the leaders in this ferociously competitive market last year.

[Source: DoNews - article in Chinese]

These stats come from the group buy aggregator and analytics company, Dataotuan. For the December figures it looked at 125 deals sites across 345 cities.

Last month saw the further rise of 55Tuan, rising to be second in terms of market share. Lashou, once the leader in this industry, has suffered quite a knock, dropping down to fourth:

Lashou’s drop might well be due to a lack of popular deals. That’s something that Dianping, Nuomi, and Meituan are doing – as they often seem to do – very well:

Compared to the last time we looked at the deals market in the country, the average price of a deal went up a meagre 3RMB to now be at 140RMB (US$22):

2011 Daily Deals Sector in Summary

Looking at 2011 as a whole, Dataotuan observes that the top 10 deals sites take 71.8 percent market share of the whole industry – while the top 11 to 20-placed websites fight over 16.7 percent share. The remaining crumbs are scrapped over by literally thousands of rivals:

So, despite a number of controversies at individual Chinese deals sites, and industry-wide issues such as customer complaints and some sites way behind in paying merchants, the whole sector has somewhat stabilized and a clear hierarchy has been plotted out. But that doesn’t mean that 2012 will be any less competitive.

For the full stats, plus some insights from deals sites across Asia, hit the source link below.

[Source: Dataotuan]

Here’s a sentence we’ve never uttered before: Good news for Groupon in Asia! Yes, the American group-buying service Groupon (NASDAQ:GRPN) has extended its lead even further in the Taiwanese daily deals sector, and now commands over half of the market share on the island.

The last time we looked at the situation in Taiwan back in July 2011, we saw Groupon had 47.7 percent market share there as the entire group-buying industry grew by 8.3 percent. The very latest data, once again from Goodlife.tw, for December shows that the entire sector shrank by a minuscule 0.9 percent, and that Groupon Taiwan has grown in that time-span to now have an even firmer grasp – a full 52.37 percent in market share.

Gomaji and 17Life remain a consistent second and third place. The latter half of 2011 was good news not just for Groupon, but also for 17Life (gaining 5 percent), and for the mainland contenders Lashou, and Nuomi. That last one is partly owned by the Chinese social networking site Renren (NYSE:RENN). Meanwhile, both Gomaji and Yahoo’s (NASDAQ:YHOO) Taiwan deals portal remained stagnant. JiGoCity – which also operates in mainland China – is not shown in the graph but is another riser, ending the year in sixth place with a 4.1 percent share.

We’ve taken some of the raw data and made a chart to show how things have changed in Taiwan from July to December last year (click to enlarge):

Much of the top eight deals websites in Taiwan remain stable as the whole market shows less volatility than the ferocious scene in daily deals in mainland China.

Groupon entered Taiwan by acquiring the already successful local deals site Atlaspost exactly a year ago. At the time, Gomaji and 17Life were still its main competitors.

Meanwhile, the US site LivingSocial still hasn’t entered Taiwan, despite an aggressive push into Asia last summer. Perhaps it could jump-start its move into the stable Taiwanese group-buy market by buying up either Gomaji or 17Life.

[Source: Goodlife.tw - article in Chinese]

Updated stats for China’s fierce group-buy market seem to suggest that we can now crown a triumvirate of winners – Lashou, Meituan, and 55Tuan. That’s because the trio has finally nailed the holy grail of leading in terms of market share, number of deals sold, below average discounts, and highest revenues. To make that even better, Lashou has a higher than average deal price (where the average deal sold is 137 RMB, which is US$22).

As with the last time we looked at this sector in-depth, the stats are provided by Dataotuan. One major difference is that Tencent’s (HKG:0700) group buying portal, QQTuan, has been ignored as it’s now deemed to be more of a deals aggregator. Taobao’s Jua Hua Suan is similarly left out of these stats.

Here are a five key slides from the presentation which shows figures that go up to the end of October, which are the newest available. (Hit the source link below to see the full show):

Daily Deals Market Share

Lashou once again cements its lead as the top indie startup in this segment, with 12.7 percent of market share evaluated by revenue. Groupon’s (NASDAQ:GRPN) venture in China, Gaopeng, is still clinging on just outside of the top ten.

In fourth and fifth places are some hard-charging smaller rivals – 58Tuan, and 24Quan. The latter has been in the news for all the wrong reasons this month, so it’ll be interesting to see if that progress is sustainable:

Revenue and Deals Sold

This industry has been so painful – with lay-offs, protests, unpaid merchants, etc. – because the revenue from such deals is often so low, leaving the labour-intensive group buy sites struggling to survive on single-digit profit margins. The bad news (as seen in the final slide below) is that average revenue is still dropping, although the average deal price is trending upwards (despite a jolt downwards in October).

FTuan will be familiar to regular readers, but it seems to be sliding down in everything except the average price of its sold deals.

Getting back onto the subject of 24Quan, you’ll notice from the blue bars that its large discounts – way above average – are causing lower than average deal prices. It’s presumably a deliberate strategy to try break into the top three.

Hop on over to DaTaoTuan’s site for the full 30-slide presentation, which includes break-downs of the most popular kinds of services sold, and which parts of China have the best-quality deals.

[Source: DaTaoTuan’s blog]

Lashou, one of China’s leading group-buy sites, is rumored to be expanding into the more conventional e-commerce segment next week with the launch of ‘Lashou Mall.’ Chinese tech media reports that the Lashou Mall – due for launch on December 8th – would be aimed at helping consumers buy services online from local small businesses in a more straightforward way than the current ‘deals’ method. The fees charged to local firms could be as low as 1,980 RMB (US$312) for six months.

The group-buy/daily deals segment in China has been frantic and fierce this year, marred by lawsuits, protests, firings, and unpaid merchants. Plus, margins are tight – possibly below 10 percent for the sites themselves – and many are losing money.

A shift towards the B2C – or B2B2C – sector, would seem a good way for Lashou to scale, diversify, and secure fatter margins all at the same time. As per today’s rumors, it sounds like an open platform of the sort that Alibaba’s Taobao Mall pioneered in 2008, and which has gone on to be the country’s leading e-commerce site.

Lashou Mall vs Taobao Mall?

Purported lower overheads for vendors on Lashou Mall would be quite timely and pertinent, as the past month has seen both virtual protests and actual, physical demonstrations by smaller businesses running on Taobao Mall due to rule changes that brought in much higher cash deposits. If it turns out to be true, Lashou Mall’s much lower rents could be disruptive in the industry, especially amongst much smaller family-run companies.

Lashou is supposedly listing in the US this month, but it’s believed to have been delayed by regulatory issues. A major announcement from Lashou next week would be in contravention of the pre-listing quiet period – and so would indicate that the IPO was either significantly delayed or cancelled altogether.

[Source: QQ Tech news - article in Chinese]

Our resident financial expert, Mr. G. O' Rilla, actually reckons that O2O investment figures reached just over "a gorillion dollars so far in 2011."

Stats put together by ChinaVenture show that Chinese web companies of the so-called online-to-offline (O2O) variety – such as group-buy sites and e-commerce travel services – have raised a total of 7 billion RMB (US$1.1 billion) in venture capital so far this year. That rebuts widespread fears of a huge squeeze on funding for web firms, at a time of tightened credit and concerns about the financial integrity of some recent Chinese IPOs.

Among the biggest recipients of VC largesse were Qunar – courtesy of $300+ million from Baidu (NASDAQ:BIDU) – and Lashou’s $110 million from Milestone Capital and numerous other sources. Here’s the table of major investments in this sector (which we took the liberty of remaking and prettifying):

A representative of Chinese investment consultants Asimu told ChinaVenture that these O2O-based services – despite operating in fiercely competitive markets – are bolstered by their offering “the basic necessities of life,” such as food and clothing. He also pointed out that, in such a vast market, “even if you have just a one percent market share […] it’s likely that you can go public.”

That’s borne out by upcoming IPOs for Lashou (though currently being delayed) and Vancl (on course for next month).

A total of 64 O2O-based services have snagged some amount of funding this year (only eight of the biggest names are shown in the above table), which is good news. The only issue we have is that “online-to-offline” is quite a silly phrase, which relates to pretty much everything we buy on the internet. Perhaps suffice to say that e-commerce sites are being viewed – and invested in – as tomorrow’s enterprise titans. And that’s not least because as much as half of China’s poorer urbanites are already using local online shopping sites.

[Source: ChinaVenture - article in Chinese]

Group buying website Deals and You has raised $17 million from a group of investors, led by Mayfield Fund and Norwest Venture Partners – with participation from Nokia Growth Partners and Intel Capital - according to report from the Business Standard.

The report further states that the 14-month old company has apparently divested around 18 percent to 20 percent to investors and is currently being valued at US$85 million.

Deals And You will be using this latest infusion of capital to invest in technology, infrastructure, hiring talent, and branding. The company is also apparently revamping its website, aiming to deliver an improved user interface to its customers.

Elaborating on the new funding round, Gaurav Kachru, CEO, Deals And You, said:

We are very happy and encouraged by the faith our investors have shown in us. The raised capital will help us continue to build a strong customer focused business with greater investments in technology and infrastructure, which will help better serve our customers.

Known as Wanamo.com in its previous incarnation, this daily deals website was acquired in June 2010 by Group Buying Global A.G. and Harish Behl of Smile Interactive Technologies Group. Two months down the lane, the website was rebranded and launched as Deals And You, raising $1.5 million in funding from Group Buying Global A.G.

The company currently serves daily local deals in 20 cities and national deals ranging across product, travel, and retail in 250 cities in India.

The Chinese group buying and venue review site, Dianping.com, has been awarded the title of “Chinese web company with the most investment potential.” That’s according to 70 leading venture investors in China who whittled down a list of 50 contenders to ultimately declare Dianping the winner. The event was hosted by Zero2IPO, which hooks up entrepreneurs with VC sources, and took place this past weekend in Shanghai.

The investors were particularly impressed, they said, by Dianping’s mobile apps – see here – for iPhone, Android, BlackBerry, and Symbian. That’s not only because the apps look pretty good, but because their strength shows how the company understands the new mobile wave, and how it’s critical in driving growth. Indeed, right now monthly page views via mobiles represent about 50 percent of the site’s total, and are expected to surpass the regular site soon in terms of growth.

This August, Dianping had 10 million unique mobile users. The company claims more than 42 million monthly active users, approximately 20 million reviews, and over 1.2 million member merchants.

Dianping was founded back in 2003, solely as a site for local listings and reviews. But recently it utilised its local network and merchant ties to also provide daily deals in China’s over-crowded group buy sector. Earlier this year, the site secured joint investment of more than US$100 million from Trust Bridge Partners, Sequoia Capital, Qiming Venture Partners, and Lightspeed Venture Partners.

Back in April of this year, we caught up with Dianping’s Michael Jiang and talked to him on video about the site and its growth.

Alibaba has today announced that its group buy site, Taobao Ju Hua Suan – meaning Taobao group bargains – is going to be spun off as a separate company. It has its own daily deals – which come from vendors as diverse as restaurants and travel agencies – and also serves as an open platform for other sites to sell their deals.

The site, at ju.taobao.com, opened in March 2010 and leveraged on the already huge Taobao user-base to get a head-start on the huge assortment of Groupon clones that popped up throughout last year. Its biggest rival by name is Tencent’s (HKG:0700) QQ Tuan; in terms of actual traffic and deals sold, its closest competitor seems to be Lashou, the much smaller start-up which is looking for a chance to IPO in the US next year.

Why make Ju Hua Suan an independent company within the Alibaba Group right now? An Alibaba spokeswoman explained to us:

We believe this will allow the platform to focus on its core competency and better serve its customers. Going forward, Ju Hua Suan’s strategy will revolve around providing an open, low-cost and efficient platform for the group shopping industry, details will be announced in the coming weeks.

Sounds like there’s something cooking there. It also indicates the site has matured enough to stand on its own.

Yesterday we looked at a new report which shows that 42.2 million of Chinese 500 million netizens used group buy sites in the past six months. Despite all that enthusiasm for bargains, a number of the indie sites are hurting – or simply over-hired in the early stages – and have been cutting staff in recent months. But the deals portals of China’s two web giants, Tencent and Alibaba, seem to have been immune.

The China Internet Network Information Center (CNNIC) has today released a paper entitled 2011 China Group Buy Users Investigative Report which paints a picture of the daily deals landscape in China – and the many dissatisfied users who buy the deals.

In total, 42.2 million of China’s 500 million netizens have used group buy sites in the past year and an astonishing 45.6 percent of them have had negative experiences with what they’ve bought. Of course, that’s often an issue with vendors rather than with the deals sites themselves. From personal experience, I find that some short-sighted restaurants treat group buy customers as second-class citizens, with no thought to the fact that they, as business owners, are supposed to be trying to convert these new-comers into regular customers.

Despite a great deal of turmoil in the overcrowded industry in China – with significant job lay-offs at Lashou, at 55Tuan, and at the Groupon.cn clone in recent weeks – there was actually 125 percent growth in group buy user numbers in the six months up to June 2011.

Group Buy User Facts and Stats for 2011

Unsurprisingly, these Groupon clones are more popular in urban and moneyed areas in China – namely in the eastern coastal regions around Shanghai, where 10.5 percent of web users have used them; in western and central parts of the country, it’s down to 6.7 percent. The national average penetration rate of these deals sites is 8.7 percent.

Here are some other key stats which illuminate this complex and fragmented sector in China (all figures are percentages):

• Deal product categories, by rate of purchase by users:
  Food and beverages: 73.5
  Leisure and entertainment: 58.5
  Home appliances: 43
  Digital gadgets: 28.4
  Beauty and fitness: 27.2
  Travel and hotels: 15.3
  Outdoor activities: 10.8

• Factors in whether to buy a deal, by rate of importance to users:
  Extent of discount: 85.4
  Extent of need: 57.9
  Location: 52.5

• Deal buyers by gender:
  Female: 53.9
  Male: 46.1

• Will continue to use deals sites in the future?
  Yes: 82.1
  No: 14.8
  Unsure: 3.1

• Of the 45.6 percent who’d had bad experiences – Reasons for dissatisfaction with a deal, by instance of occurrence for users:
  Quality of goods: 71.6
  Merchant’s bad attitude: 40.3
  Excessive delivery time: 28.6
  False information given about product: 21.7
  Poor service in general: 21.1

Other little tid-bits include how group buy site users tend to be better educated, and have higher wages, than the national average among netizens – a sign that this kind of service is indeed more popular in urban areas.

With a reported 5,000 deals sites operating in China, consumers have plenty of choice, but not much in the way of guarantees of quality or authenticity. We’re awaiting some signs of consolidation in the industry, which surely can’t sustain more than a handful of top competitors.

The CNNIC is a state-run web registry, policy and analytics organization.

[Source: DoNews - article in Chinese]

Today, the Chinese media is reporting rumors from reliable sources that Lashou, one of China’s leading indie group buy sites, is about to lay off a significant amount of its nationwide workforce, with as much as 50 percent of staff in Shanghai and Beijing facing being fired.

The rumors cite leaks from Lashou staff, who claim that a massive internal restructuring is underway. One example given is that workers in the Lashou office in Suzhou have been forced, in recent weeks, to work until midnight without overtime pay; those who don’t comply face losing their job. The sources also say that 50 percent of Shanghai and Beijing staff will be forced out, but there’s no indication of how many jobs will be lost at the firm nationwide.

Just last month, we heard that Lashou is planning a US IPO in 2012.

It seems not even China’s top group buy sites are immune to this. Just yesterday we looked at the anger from users and businesses – and even street protests – that followed 55Tuan’s recent closure of 35 of its offices.

It has been even worse for those lower down the food chain in this way over-crowded sector, with the unofficial Groupon clone, Groupon.cn, having reportedly shed 80 percent of its staff since its inception.

We can look at this in two ways: either the whole daily deals model is unsustainable and heading for collapse; or – and this is where I come down – all such websites deliberately over-hired upon launch, so as to have as much personnel on the ground as possible, as if trying to win some 11th-century field-battle. And now, inevitably, even the more successful sites – such as Lashou – are having to trim back to more realistic staffing levels.

[Source: Techweb - article in Chinese]

Everyone loves a bargain. So which daily deals sites are creating the hottest deals? (Image source: China Daily)

In updated stats from group buy deal aggregator DaTaoTuan which go right up to the end of August, we get a new snapshot of China’s frantic and fragmented daily deals segment. Last time we checked, earlier this summer, we saw Tencent’s QQ Tuan was the king in terms of both market share and revenue.

This time round we see the top 20 deal sites in the country, and also get a good sense of who’s creating – and selling – the most successful packages. Note that DaTaoTuan didn’t scrape revenue figures this time.

China’s Group Buy Top 20

The market share in China, by revenue, up to the end of August (pictured above) shows that Tencent is still the leader. Below QQ Tuan, however, it’s still a choppy sea of rough competition. Meituan has slipped from second place in June to fourth in August; Manzuo from its third ranking down to fifth; 24Quan from fourth to eighth; and FTuan – which bagged US$60 million in funding this week – from sixth to tenth.

We were surprised to see that 55Tuan – whom we recently saw being sued by a comedian for using his image without permission – rose from ninth to be ranked second behind Tencent.

Top Deals

It’s a certain kind of magic that makes a daily deal into a top seller – and sadly no-one quite knows how to perform the trick at will. But DaTaoTuan does know that a successful deal not only sells like hot cakes, but also brings in 48 times more revenue than the average package, and has a lower than average discount:

Some group buy sites seem to have the knack for creating those well-received deals. Dianping, Nuomi, and Manzuo are the top three sites in this respect. Here’s a breakdown of who’s creating the top deals in August:

It’s interesting to see that big names like Lashou and Gaopeng do so badly at this, suggesting an alarming amount of deals being poorly received and struggling to sell on their sites.

[Source: DaTaoTuan’s blog, or view its entire report on SlideShare]

Wang Piao – meaning “web tickets” – is a Chinese net company that sells cinema ticket deals in 23 cities. It will soon complete a second round of funding – at an as yet undisclosed amount – that will enable it to integrate new location-based services (LBS) into its mobile apps for iPhone and Android. Last year the site raised 30 million RMB (US$47 mil). As well as being a specialist e-commerce platform, Wang Piao also allows users to post movie reviews.

Talking to DoNews, Wang Piao CEO Jiang Chun-yang (pictured below) explains that the VC financing will allow him to add more of a social element to the site, as well as to make it into a “one-stop service for movie-goers.” i.e.: to allow users to research movie titles, check venues and prices, get deals and buy tickets, check-in, and then write a review of the film as well. It might venture into a broader deals on dinners and other leisure items.

On Wang Piao, there are six key tools, as represented by the horizontal tabs. Look, for example, at the page for the Nicolas Cage movie Drive Angry 3D, which I’m sure will be mind-numbingly awful absolutely amazing. Those tabs give local cinema times and prices, user reviews, web reviews, the movie trailer, promo photos, and some related films that might be of interest.

Wangpiao.com CEO Jiang Chun-yang. (Image source: DoNews)

Wang Piao has been around since 2004, but only really gained traction in 2007, when more cinemas sprang up around China, and people decided to spend more on leisure activities. The turning point coincided with – or was inspired by? – the original Transformers movie, which saw Wang Piao’s sales go from 2,000 per month, to more than 2,000 per day. It was an early experiment in what became the daily deals industry – dominated in China now by QQ Tuan, Taobao Ju, Meituan, and Lashou – and so necessitated some arm-twisting to get cinemas to give Wang Piao a chance.

The company has expanded how movie tickets can be bought and redeemed recently. And, of course, it’s all going towards mobile. In the past, Wang Piao required bookings to be done on the main website on a PC, and the ticket had to be printed out. Now, it can all be done in the mobile apps, with either a scannable barcode or a codenumber sent by SMS being used to claim the paper tickets when at the venue.

Jiang Chun-yang claims his site now has one million registered users, and – for the moment – is mostly growing by word-of-mouth. Recent promos have taken some movie ticket prices as low as 9.9 RMB ($1.55), though new 3D movies such as Drive Angry 3D cost about 90 RMB.

Since last November, Wang Piao has partnered-up with the fashion e-commerce site Vancl – whom we heard, just two days ago, might be prepping for a US IPO – so that movie tickets can be gifted to friends.

Group buy site Dianping.com is already pioneering where Wang Piao looks to be heading by incorporating LBS functions into its deals to make the whole experience more social. As a bonus, check-ins also serve as free marketing, telling your friends what deal you’re now enjoying, and giving them pointers. Dianping has been pushing into movie ticket deals this year, meaning that Wang Piao has strong competition already.

You can check out Wangpiao.com, and its mobile apps are here.

[Source: DoNews - article in Chinese]

FTuan CEO Lin Ning (left) with Kaixin CEO Cheng Bing-hao, at FTuan HQ. (Image source: QQ Tech news)

Chinese group buy site FTuan has confirmed, by way of its CEO, Lin Ning, that it has secured US$60 million in third-round funding. With 2,000 employees, Mr Lin states that FTuan has the cash to be sustainable for two or three years. Plus, the company has one more round of financing in the pipeline.

It has also been revealed that FTuan is powering the new Kaixin Tuan deals site that we looked at recently. It’s a partnership that sees FTuan effectively operating the Kaixin Tuan platform (pictured below), as well as being one of the many other group buy sites to coordinate some deals with Kaixin.

The Kaixin Tuan site that is operated by FTuan.

The FTuan and Kaixin partnership will soon go further, into – to quote QQ Tech News – a sort of “social e-commerce” platform. Kaixin is a SNS and social gaming platform, so that plan sounds like an interesting fusion of each company’s speciality. No other details are yet available on that.

Back in July of this year, Tencent (HKG:0700) was one of the investors in FTuan’s second round of funding. It was never disclosed just how much the giant web portal injected into the group buy site. Tencent is Groupon’s official joint-venture partner in China, but it has been hedging its bets with its own QQ Tuan, as well as the FTuan investment.

In the cut-throat group buy sector in China, it seems to be a case of tie-up or die-off, as a few key players emerge and build up a kind of gravity that takes people away from smaller deals sites. The last time we looked at statistics relating to offered/sold deals and revenue in this sector, FTuan was a top ten competitor.

[Source: QQ Tech news - article in Chinese]

The group buy website that most audaciously cloned Groupon in China looks like it might be one of the first big-name casualties in the ferocious daily deals market. Formerly known as, provocatively, Groupon.cn – but now called TuanBao, with only the URL saying “Groupon” – it enacted a new round of job cuts this week that saw dozens of people being let go from individual sales offices scattered across the country.

It now appears that the cloned Groupon.cn… hmmm, I mean TuanBao, has fired 70 to 75 percent of all its staff from the time of its inception to now. Earlier this year, Chinese media reports today, the company had 4,000 employees nationwide. But that figure is now at 700. That’s 82.5 percent of all employees at TuanBao having being told to clear their desks.

Taking some regional offices as examples, TuanBao’s Beijing branch has trimmed its editorial department from 120 to 36 people. Further south, in Suzhou, the original team of 40 there is now down to 10.

TuanBao/Groupon.cn's rather confusing dual identity.

TuanBao’s woes are indicative of the group buy sector’s extraordinarily tight margins, and the fact that throwing lots of poorly-paid and desperate sales staff at the situation doesn’t necessarily turn all your offered deals into sold deals. Industry insiders believe that there are as many as 5,000 group buy sites in China – and none of them are actually making any money.

The official and genuine Groupon operations in China, Gaopeng, has had a rough summer as well, with as many as 400 staff being fired as part of an apparent tightening or restructuring. Though the official response was that the company was just firing underperforming workers.

In April of this year, a false rumor spread through the deals industry here that the real Groupon had acquired the Groupon clone in China. But this news surely puts that notion to rest forever. Now the real Groupon needs to be much, much more worried about its more successful adversaries here, such as Meituan or Lashou. Indeed, the latter might even beat Groupon.com to a US IPO, which would be pretty interesting.

[Source: DoNews - article in Chinese]

Skimbl is a Euro-Chinese start-up, launched just this summer, that’s a sort of contextualised, reviews- and events-oriented search engine. It’s run out of Shanghai, and for the moment, is focused only on this metropolis. Located at Skimbl.com, it curates and aggregates real-time feeds from over one hundred relevant blogs and websites, with an emphasis on reviews, deals, and being useful to the city’s urbanites.

It pulls in pictures from, for example, daily deals site Dianping, and events from local lifestyle site City Weekend. Currently, the site is in English only, and the team is being tight-lipped about a possible Chinese localization. Nonetheless, Skimbl has iPhone and Android apps underway, and an API is in the works too.

Why that name? According to one of its co-founders, it’s a shot at making a word that can be made into a generic verb, as has happened with the phrase “to google” – and so the start-up likes to think of people skimbling for local-area info. Also, so I’m told, it’s a kind of acronym of ‘skim Based on Location,’ which is its founding principle.

Skimbl.com co-founder and marketing guy, Louis.

To discover more, Penn-Olson chatted with Skimbl’s co-founder and marketing director, Louis (pictured right), who’s a 30-year old French guy now based in Shanghai:

1. Why did you launch Skimbl?

After living in Shanghai for a while, we got used to browsing several local websites and blogs to see what’s new and what’s happening in the city. Sometimes it took an hour to find what we were looking for. At this point, we decided – with some friends – to develop an aggregator that gathers information from hundreds of local websites and compiles them on to one platform. And so the Skimbl concept was created.

2. Skimbl is run out of China and Europe. How big is your team? And why did you set-up like this?

Nowadays, Skimbl is only operated from Shanghai. One of our colleagues used to work from Europe but he recently joined us in Shanghai a few months ago. As with nearly every start-up, we are a small team of four people working full-time on it. One great advantage that we have is that we are a group of friends from different cultural backgrounds, with different competencies, working in the same field that we all love: the Internet.

We decided to work from one location for one reason: It is more important to gather an ‘A-Team’ with a synergy of skills and the same state of mind, than working from different locations. We keep looking for talented and creative people who are able to add their competencies to Skimbl.

3. Do you have funding or backing? If not, are you seeking?

Before launching Skimbl, we’d been working on the development of the project for one year. After three months of development we had the opportunity to receive seed investment. This private investment – plus some of our personal funds – allowed us to finalize the first version of the website. At the moment, even though we have between 5 to 8 percent growth per day in terms of our user-base, still we are looking for investment and sponsors to sustain our growth. We have three major aims: one is to improve and enlarge our technology, second is to increase our target market, and third is to expand about our geographical coverage.

4. What is your start-up’s business model?

Our primary service is a cost-per-click and/or cost-per-lead model. Besides integrated content that is free for the providers, we also integrate services such as our restaurant reservation service, called ‘dining secretary.’ Our visitors can access all information to help their decision to visit to this venue. If they are interested, they can make an online reservation. It is a relevant service for our users and a pertinent lead for our advertisers. We plan to have those type of features adapted for every section of our website.

The second service that we will offer soon is the top placement ad product for venues. During our opening month, August this year, we reached over 22,000 queries on our search engine. So the idea is to provide an affordable package for venues to be set as the top listings result for specific queries, and even on potential competitors’ detail pages. Since our search is based on category, location and time, we offer a powerful tool for venues to target specific users.

Finally, the third service focuses on design, web-development and management of a venue’s website. [It includes] a management interface where a venue’s owner can upload its events, coupons, pictures, and other content to their own website, Skimbl page, or Skimbl’s website partners. Plus we are implementing a feature to let owners keep track on latest reviews their venues hitting the web, so they can respond to them in timely manner.

5. What can Skimbl, with its curated search, do better for local searches than Google, Bing or Baidu?

Even though our technology is scalable for global expansion, we are operating locally and we are moderating and filtering our data according to local needs. 85 percent of our data is processed automatically; however, our team is double-checking all that information to make sure it’s 100 percent accurate. We are working hard on improving our technology of extracting data from free text, to achieve 95 percent of data extraction automatically.

6. What other local integration tweaks will you have?

We are currently developing a local deals aggregator. We are also working on an API for third-party websites and blogs that prefer to rely on Skimbl’s database than to spend too much time on managing their own. It is an open source API that includes our listings, local search engine, and other cool features. Finally, we are preparing a Skimbl app for iPhone and Android.

Beside those major developments, we are releasing one to three updates everyday on our website to improve our visitors’ experience. We have some other sections of the website that should be released by the end of 2011, so stay tuned.

The long drawn-out battle between Renren (NYSE:RENN) and Kaixin over the “Kaixin” brand-name looks like it might have moved to the highly-competitive world of Chinese group buy sites.

Kaixin’s daily deals site – news of which we covered yesterday, as it opened the platform to partners – has a clone called KaixinTuan. Compare the official Kaixin deals site here, with the counterfeit one here.

For the background history, we need to think of “Kaixin” the social network as Kaixin001, which is the URL it owns. Renren – backed by Oak Pacific Interactive – actually owns the Kaixin.com URL, even though it lost the acrimonious lawsuit between the two firms when the former was adjudged to have copied the essence of Kaixin001’s name. Renren’s Kaixin.com site later merged with the main social network, and the URL was decommissioned, but its ownership was retained.

Although that battle is over, the war seems to be ongoing – but now in the deals industry. What’s significant with this development is that the group buy clone’s logo looks a lot like Renren’s visualization of the “Kaixin” brand, as it appears when you type kaixin.com in your browser and you get redirected to renren.com, with an explanatory banner saying the two sites have merged and that your login now works on Renren. See how the two dots form eyes, and a smile suspends beneath the two “i”s:

This could suggest that Renren is actually behind the clone deals site. Of course, it could also mean that the cloner – the shape-shifters that they are – nabbed the design from Renren’s banner because they thought it’d be too risky to steal it from the actual Kaixin site. It’s not clear who owns the kaixintuan.com URL, or whose name is on its mandatory Chinese website license. There are no other clues on the clone site that link it directly to Renren.

In terms of daily deals, Renren has its own challenger in the form of Nuomi, in which it has invested millions of dollars, and holds a major stake. By all recent measures, Nuomi is doing better than Kaixin’s official offering in the fragmented deals market in China.

Penn-Olson reached out to Kaixin for comment, who couldn’t be drawn for a direct quote. But the firm’s response is a phlegmatic one, saying that if the clone provides a good experience, then it reinforces the Kaixin[001] brand, and that users will figure it all out in the end. We’ll update if we hear back from Renren. UPDATE: A Renren representative suggests only that “I think they were inspired by our logo.”

On the wider clone issue, there are – like after some idiot sneezes all over everyone in an elevator – viral outbursts all over the place, such as kxtuan.com, or renrenzhe.com. But only the one identified above has the whiff and suspicion of Renren backing.

In the meantime, hit the comments to tell us if you think this smacks of skullduggery, sabotage, or mere serendipity.

Online deals website LivingSocial has made another bold step towards the Asian market by acquiring TicketMonster, the leading daily deals site in Korea.

The Korean service has been growing fast, reportedly getting takeover offers for some time now. “Some of them are serious and we keep talking to them… But it really comes down to valuation,” said CEO Daniel Shin back in May. And while the financial details of the LivingSocial deal were not disclosed, we can only assume that they were agreeable to Mr. Shin.

TicketMonster has 600 employees who are now set to join the LivingSocial team. Tim O’Shaughnessy, the CEO of LivingSocial, commented on the deal in the company’s announcement:

ticketmonster.co.kr

TicketMonster is one of Korea’s most recognized and trusted brands in the nascent daily deal industry, and we are excited to bring them into the LivingSocial family… TicketMonster and LivingSocial share the same culture of innovation, customer focus and fun, and we believe that the benefits we bring to consumers can be extended to other markets in Asia and around the world.”

It was just back in late June when we reported that the company had picked up Indonesian group-buying site DealKeren with its acquisition of Ensogo. That pick up gave the company a presence in Thailand and the Philippines as well.

This is the ninth acquisition for LivingSocial over the past year. We expect that it probably won’t be the last.

Chinese start-up Let’s Powwow is a unique location-based service (LBS), social network, and group buy/deals site. Located at letspw.com, the site has nine employees now, and is notable for having a triumvirate of founders from China, Italy, and the US.

Rather than just focusing on check-ins or brands, Lets Powwow instead aims to connect its users more closely with actual venues, create hyperlocal deals, get users to “redeem” deals at venues, and encourage people to bring along friends to a store. There’s an iPhone and Android app to accompany the site.

Let’s Powwow seems less like fellow Chinese LBS Jiepang.com – whose CEO we interviewed recently – and more like the Indian Geosocials. That’s because both Geosocials and Let’s Powwow put less emphasis on check-ins and are instead oriented towards being hyperlocal and ‘game’-like.

To find out more about Let’s Powwow and where it’s heading, Penn Olson talked to its American CEO and co-founder Adam Guli (pictured below):

1. What inspired you to launch this start-up?

Well I have been part of start-ups in the past – always the guy working for someone else. I gained a real taste for the freedom and fluidity of the whole experience, even though each project ended in failure. I learned a lot from those failures to hopefully give me some insight into how not to make the same mistakes. But ultimately it was working for huge organizations and not having my ideas or strategies amount to more then a pat on the back and a “What are you going to do for me now” attitude.

2. What kind of financing did it take? Have you had some venture capital backing?

My two co-founders and I started with a pooled US$40,000 to start this thing. It meant we had to be creative in how we spent our funds. Over the past year we have had seed funding and some angel funding of nearly $200,000. We are in major fund-raising mode now and hope to bring in some bigger fish to help take us to the next level.

3. You position Let’s PowWow as an LBS with group buy deals and a “game” element thrown in. How does it work for a user?

We stress the social aspect of the app to our users. We do this by encouraging them to share their thoughts, feelings and ideas about their surroundings. The problem with LBS at the moment is that the games are focused on an individual raising his/her own status. This provides little value both to their friends and the venues they “check-in” at.

Our deals are aimed at identifying a venue’s target customers and develop promotions that will attract that customer and his/her friends. We want each user to be a social influencer to their circle of friends so we can reward them. Moreover, we are implementing gaming mechanics that encourage group behavior, and can reward users for sharing their ‘liked” establishments.

4. How do you reward a user who acts, in your words, as a “social influencer” to his/her friends?

The concept is simple. Because we are tracking the users who are frequenting a venue often and redeeming deals, checking in and ‘liking’ the place, we can identify them as a possible social influencer. We can target these users via push notifications for more rewards if they bring other friends into the place. For example by saying: “Bring three friends to enjoy our lunch special and you eat for free.” Those who actually follow up and bring their friends in are instantly identified as a social influencer.

But in reality, anyone who likes a place and shares the venue with their friend, and checks in with their friends at a place or event, can be an influencer. The beauty of the system is that we can make anyone into a social influencer once we know what they really like. Then we can build rewards around that to have them influence their friends to partake.

5. You’ve said you don’t emphasize checking-in so much, and prefer to focus on a user “redeeming” stuff at a location when they buy stuff…

Checking in is a social act that is based on the internet world to show your friends where you WANT them to see you at. As most LBS apps do not actually care if you are at a location or not when you check-in, it decreases the value of that user for the venue itself. By creating a redeem function in our deals, the venue actually validates that an individual is at their establishment and spending money.

This is a lot more interesting to us because we believe if a user/customer is actually at a place and spending money, then we can make money from that. Too little focus has been put on the venues in the LBS world at the moment, and therefore little revenue has been produced for these companies. When you have the venues participate in the entire experience some interesting business models end up developing.

6. You seem to be up against both LBS such as Jiepang, and group-buy sites such as Dianping and Lashou. How are you persuading clients/venues that your way is the right way (or that your users have more income, etc)?

Because we add value for the venue. It is simply not enough to have people looking at or seeing what people have said about a place. Venues are more interested in seeing what are the buying behaviors their customers have. Then they can target loyal or active customers and have these customers draw similar-minded customers to their establishment.

Because we work with the venues in creating deals that can identify these buying behaviors we collect and give reports on what is working and what is not. We become the platform that can be used to understand gaps within the business. More importantly, because we do not populate our search of venues simply using distance, but rather in terms of popularity. That ranks personal interest and friends’ interests, which is a natural ranking system. That’s what happens in the venue list in Let’s Powwow – it does not happen with other LBS companies.

In effect, we are creating a meta-game for the venues to try to bring their ranking up. It is similar to Google analytics, but focused on a 500, 1,000, or 2,000 group of search results around a particular individual. No one else does this at the moment, and it creates great appeal for our service.

7. Because your service is more focused on venues and what users actually do in them, will this only work at high-end places, such as upscale hotels or boutique stores? Can it be scaled?

We are easily scalable within reason. We are targeting mid- to high-end venues. In China, the middle class demographic is expanding rapidly and there are new places popping up daily to feed their desires. We believe that through this range we have more than enough room to grow and become profitable.

8. Why did you decide to launch this start-up in China, rather than any other country?

300 million mobile internet users and growing! The math does not lie. We can accomplish more traction in one market then others are doing globally. Foursquare has 10 million users globally. China already has 18 million LBS users. Imagine what will happen if we can make this thing really popular. Ask [Sina] Weibo how they are doing and it gives you a hint of where our ambitions are. It’s very exiting to be here. Besides, I fully believe that it will be Chinese companies re-shaping the commercial world, and we want to be part of that new shift in power.

The growth of e-commerce and social commerce in Indonesia is now enlivened by the presence of both local and foreign sites.

We thought it would be great to list out some of the more popular online shopping platforms in the country for your reading pleasure.

The list is not exhaustive but it does provide you with a good overview of Indonesia’s online shopping platforms.

1. Rakuten Belanja Online

Alexa Stats:

As a new player in the country, Rakuten Indonesia is currently ranked at the 503 postion on Alexa.

2. Multiply

Alexa Stats:

Multiply has a global rank at 380 on Alexa and 25 in Indonesia.

3. Kaskus

Kaskus’ trading forum (FJB) has been around for five years. Member can sell goods ranging from used mobile phones to the latest BMW car. Everyone can search for almost anything in this forum with any price range, making this forum an excellent source of shopping information.

Alexa Stats:

Kaskus is ranked number 328 in the world, and the number 7 most popular site in Indonesia. Most Kaskus members are based in big cities like Jakarta and Surabaya, considering the levels of the economy that allows them to spend more money on trading/e-commerce forum.

4. Tokobagus

To allow customers to shop while on the go, Tokobagus recently launched a BlackBerry app. Now customers can easily register, advertise, and manage their online shopping activity via their BlackBerry.

Alexa Stats:

In Indonesia, Tokobagus is ranked number 20 in Indonesia, and 1662 in worldwide rankings. Since its launch in 2003, Tokobagus has been popular among Indonesian Internet users, especially those in Malang and Semarang.

5. Kutukutubuku

Alexa Stats:

Ranking number 50,671 in the world, 28,000 in Indonesia, and 7,200 in China. Kutukutubuku attracts visitors from all over the world with traffic continue to rise.

6. Disdus

Disdus offers daily deals in many cities including Bandung, Bali, Makasar, and others. It also provides big discounts in every two days, notifying users by email or BlackBerry Messenger.

Alexa Stats:

Currently Disdus is ranked number 22,859 globally and holds the number 211 spot in the country.

7. DealKeren

DealKeren is owned by Ensogo, a giant group-buying company based in Thailand. The company, including DealKeren, was recently acquired by LivingSocial. This acquisition will help DealKeren battle it out with Disdus for an epic group-buying war in the country.

Alexa Stats:

Currently at number 18,198 worldwide, and rank 219 in Indonesia. Slowly but surely, the graph continues to climb as more customers register on the site.

8. Tokopedia

Alexa stats:

Tokopedia occupies the 17,420 spot in global rankings, and is number 244 in Indonesia.

Are there any sites that we missed? Feel free to add them as comments.