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.

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.

1. Two of the three founders of Crowdmass, a group-buying site in Australia later acquired by Groupon’s StarDeals in Australia in April 2011, are behind Venuemob.
2. The venue search site is from the inaugural batch of the Melbourne Accelerator Program and from the Optus Innov8 Seed Program, where the team was one of the first two Australian startups to receive A$450,000 (US$468,000) in funding.
3. The brains behind Venuemob have been blazing an entrepreneurial path since they were students, showing that it is possible to work on a startup while being in school.

Venuemob has a directory that lists venue information in Melbourne, allowing you to compare them and view booking availability. It aims to gradually add more features, enhancing the entire user experience for both venue owners and those searching for venues.

Events planners will appreciate that the entire venue search process is streamlined for your own convenience. It cuts down on the time spent gathering information about the venue, from the venue availability to the menu. There are also 360 degree tours on the website, which save you the hassle of scouting the site yourself.

Co-founder Ying Wang tells us more:

[T]he comparisons aspect is a pretty important part of what we do, and we are ultimately looking to make it as easy for people to find venues for functions. How we allow people to compare is to standardize the information for all the venues, including 360 interactive tours inside each of the venues. We provide these awesome tools to help users find relevant results.

With Venuemob, you would be able to explore venues you may not have considered. Venuemob also has a concierge service for busy bees who would prefer to have everything arranged.

So what inspired them to start Venuemob in the first place? Ying elaborates:

I think it was a combination of our previous local e-commerce and marketing experience while at Groupon, [along with] our personal [affinity] for exploring new exciting venues. Initially we actually worked with a lot of venue owners and we personally introduced a few functions to venue owners in Melbourne and Sydney.

The venues ended up loving it because it drove a lot of revenue to their business, and our friends were really well looked after because we knew these venue owners. [Conversely,] we were confident that they would be able to look after our friends.

The site currently boasts around 300 venue spaces in Melbourne, including bars, restaurants, hotels, and function spaces. And they are pretty selective in the venues they choose, says Ying, noting that this ensures that venues have a great reputation and are able to deliver quality service to its users.

This points back to the startup’s bottom line of ensuring top-notch customer service on its site, and that is why they have been getting frequent inquiries and more listings. In order to meet this demand, the startup has expanded from just a mere three-man team in July to 10 people at present.

The team is an impressive one in my opinion. First, they managed to pull off an exit while still in school. Second, they were able to obtain funding in a bleak investment scene like Australia.

If you happen to be in Melbourne and are looking for a venue to hold Christmas or year-end parties, you can check out Venuemob here.

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]

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]

Well this is awkward – Indonesia’s Groupon Twitter account just got hacked. Formerly at @disdus, the page has now been hijacked and had its name changed to @MusikLegal1 – stealing Groupon’s 19,000 followers in the country. It seems that the only quick solution for Groupon was to simply start an entirely new Twitter account, which is now @GrouponID. It’s not clear why they couldn’t reset the password and prevent the total hijacking.

The @MusikLegal1 tweets are now protected, so we can’t see its recent tweets unless we had followed @disdus before this incident. But a friend of mine took a snapshot of the newly hacked account:

Hi, @disdus has been hacked but we still could access it from other apps that we use before. So, Just follow our new account @grouponid

— Groupon Indonesia (@GrouponID) October 4, 2012

Groupon Indonesia has acknowledged the hack and is now asking everyone to unfollow the @MusikLegal1 account and to migrate to @GroupOnID. This is quite a big blow as Groupon Indonesia needs to reclaim its sizeable follower base – now it’s starting from zero and is currently at a mere 391 followers.

Hi, Bagi yang sudah follow akun ini, unfollow saja akun @musiklegal1. Thanks

— Groupon Indonesia (@GrouponID) October 4, 2012

[Image source: inilah.com]

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!

Japanese online service provider Excite recently launched its advertising-based points program called Excite Points, claiming to be the first of its kind user reward system in Indonesia. We talked to Nobu Kiyohara, the manager of Excite business development group [1], about the company’s expansion plans in the country.

We understand that in the last year, Excite Japan has started to look to expansion into other Asian countries, notably Taiwan and Indonesia, with the Philippines next in sight. In Taiwan, Excite has invested in two companies: e-commerce platform PCHome, and women-oriented review site Fashion Guide. Nobu added that they also tried to expand to China, but it was hard for them to identify the right market there. Should its points system prove successful in Indonesia, Excite plans to bring it to the Philippines next.

So how do Excite Points work? As shown in the above graphic, users login to the website and earn points through online activities, such as clicking a banner, subscribing to Groupon, getting a quote from an insurance company, or making purchases. Basically, it’s gamification. The points can then be redeemed for prizes at the Excite Points website.

At the moment, the program is still in the testing phase, and so the redemption options are only in the form of SmartFren phone credit top-ups. To provide more redemption options, Excite is looking to partner with Indonesian telcos Telkomsel and Indosat in the next couple of months. Excite also plans to add other products such as gadgets and more merchant’s products in the future.

The points are funded by the advertisers, or whoever sets the online activity. The company will pay Excite based on CPA (Click per Acquisition) according to what the advertisers want, like sending a quote on new auto insurance, for example. Excite explains that the CPA method offered by the program makes more sense than the usual CPC (Cost per Click). This is because the latter doesn’t guarantee that users complete the advertiser’s target activity even when they have seen and clicked on the ads, as explained on the following slide:

Nobu claims that Excite Points advertisements are better than Google Adsense and Adwords in acquiring potential customers. Google can help you acquire customers, he says, who are already interested in the product, according to user search keywords and content. While Excite Points can help acquire potential customers who might not even know about the product. The points program can introduce products to new customers who are actively seeking to earn points on the website. Of course, I’d personally say that each method has its own strengths and weaknesses.

On the Indonesian Market and Foreseeable Problems

Right now, Excite is looking to expand aggressively into the Indonesian market with its points system in terms of users, but especially advertisers. Nobu added:

Honestly speaking, the advertisement market is still small in Indonesia. I believe it’s 6 billion ad dollars including TV, traditional media, and online media. Online media consists of about only one to two percent of the whole market, but it’s growing. We are anxious to go into this market and become a game changer.

Nobu revealed that in Japan the 15-year-old points-based business system has encountered problems with “point hunters.” These are certain users who only look to get points without giving any real tangible benefits to the advertisers. A lot of point hunters even go to the extent of making multiple accounts to get the points. Should that happen, Excite already has the technology to maximize the system’s effectiveness. One such example is that Excite can submit a weekly report regarding user CPA, and then the advertisers can approve or disapprove the users regarding the point rewards. This is already implemented right now.

Whereas many other Japanese companies tend to go by themselves into new markets, Excite sees partnerships with the local major conglomerate Sinar Mas Group as its strength and differentiator here in the country. Nobu believes that together with the partner’s local knowledge and Excite know-how, they can execute and deliver the products well.

Excite doesn’t have an entity yet in Indonesia, and the team consists of four to five people located in SmartFren’s office at the moment. Nobu explained that one of the reasons why Excite chose to partner up with the carrier is because the company has data and access on active PC internet users in the country. Excite has also partnered up with mobile CPA network giant Adways Indonesia, and that should help them in the market as well.

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).

As this site’s resident group buy Grinch, I feel it’s my duty to come rain on this parade. Only I’m not going to use rain, I’m going to use something even more depressing: math. You see, if we look at the market share numbers in China’s group buy space for March (the most recent we’ve seen), we find an independent FTuan in eighth place with 6.3 percent of the market, and an independent Gaopeng in 13th place with 2.5 percent. Both companies had been seeing minor growth in the short term but were down over the long-term, with FTuan having shed three percent of its market share over the last six months, and Groupon losing 1 percent of its share.

So, let’s make a best case scenario and say that neither of them lose anything in the merger and the long term trend of market share loss has stopped. We’re left with a company that controls 8.8 percent of the group buy market. That puts it in fifth place, still behind Meituan, 55tuan, Dianping, and Lashou. Lashou would be in close reach, so if we even assume a little growth since March, maybe Gaopeng-FTuan is now in fourth place.

And it’s a distant fourth place, too. While Lashou has been slipping over the past half year, Meituan, 55tuan, and Dianping have all been growing, and all of them still have a significant lead in market share.

Now, sure, fourth place isn’t too bad. It’s a better position than either of the companies were in before the merger, certainly. But is an IPO really realistic? No. Lashou recently had to cancel its IPO plans for lack of investor interest, and I rather doubt those US investors are going to be any more excited about a company that’s in almost exactly the same place as Lashou is.

Does this mean it’s curtains for FTuan-Gaopeng? Certainly not. But it does mean it’s probably time to cancel those parades. And it’s especially time to stop talking about US IPO plans, because that is just not going to happen.

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.

We have covered a lot of Groupon clones in Indonesia, and now one has come to rapid prominence in just seven months into its business. In November 2011, David Suwarto tried to introduce a new look to the Groupon business model, launching Uluyu.com. It gives out free vouchers everyday to its users both online and offline – and for once, users do not need to print anything anymore!

I talked to Dika of Uluyu earlier today and he told me that currently Uluyu has about 400,000 active users from a total of around 550,000 users. So far it has had a total of 200 merchants as its partners. And in the last three months, Uluyu says it had 2,300 vouchers redeemed by its merchants. When I looked up Uluyu on Alexa, the website now stands equal to one of its biggest competitors AdaDiskon. But what makes Uluyu different from competing services? From my observations, Uluyu has three main differences:

Uluyu’s Unique Approach

First, while their competitors normally sell vouchers, Uluyu offers free vouchers. After registering and logging in to the website, Uluyu users, called “ULUfrens” by the company, can grab any vouchers (called “ULUpon”) by either liking it through Facebook, tweeting about it, or simply just grabbing it. Then users will receive the voucher code to be used at the designated merchants. What happens when you grab vouchers and do not use them? Your user ID will be blocked for a few weeks, depending on the number of violations.

Second, Uluyu does not provide details of the merchants on their website. Users can only see the merchant brand and information about the voucher, but nothing about the merchant’s products. When I asked Uluyu about it, it turns out that they intentionally do so not only to keep their website simple, but also so that more users would access the merchant stores and websites out of curiosity about their products.

The second idea behind that is that it’s a good way to attract merchants as they would have more potential customers – or, at least, visitors – go see their store. This too, has its disadvantages: you’re asking users to explore the products for themselves, which could be tiresome. It’s debatable, but it’s definitely something different compared to the usual Groupon approach in my opinion.

Third, Uluyu also offers vouchers offline through physical machines in malls around the Jakarta area. Their first mall partner is the biggest mall in the Gading Serpong area called Summarecon Mall Serpong (SMS). There are voucher machines located at the lobby of SMS where passers-by can receive random Uluyu vouchers for free to be used immediately inside the mall. They are currently looking to tie five more mall partnership deals in the near future. David Suwarto, founder of Uluyu comments:

At the moment, Uluyu.com is focusing on giving away free vouchers in the Jakarta area, eventually we will expand (our focus) to the other big cities in Indonesia.

What’s more awesome is the fact that Uluyu has given away five free vouchers to purchase a Blackberry Bellagio for only Rp 100,000 ($10) and one free voucher to buy a Toyota Avanza for only Rp 50,000,000 ($5,000). David insists that the added value of Uluyu compared to its competitors is their unique voucher deals. Now, if you are wondering how Uluyu makes money out of their business, it turns out that merchants pay a sum of money for an ad space on Uluyu.

There are also some unique features in Uluyu like ULUbadges and ULU$. ULUbadges reward its users through completion of challenges given, much like Foursquare. ULU$ is quite interesting as ULUpon users will receive 10 percent cashback points from the total value of purchase, which then can be redeemed with promotional products from Uluyu such as gift vouchers and movie tickets. Sadly, the two features are not currently in effect as Uluyu is focusing its resources on other projects at the moment.

So is Uluyu another Groupon clone? I think not. I believe that they are part of the new generation that offers added value through innovation upon the Groupon business model. This trend is now on the rise in Asia including FreeCharge in India and Handsup in China. I believe that we will be seeing more and more innovations like this in near future.

[Hat tip to jagatreview.com [1] [2] (articles in Indonesian) for spotting this startup.]

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]

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]

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]

Where do Singaporeans go on the web? For social networking it is Facebook. For gadgets, Apple. And for deals, it’s Groupon.

Experian Hitwise has released a list of very interesting (and detailed) findings about Singapore’s web behavior ranging from online shopping, news, to lifestyle. The sites Singaporeans frequent are mainly American. There were handful of local sites that were featured in the findings, such as Hardware zone (forum), Love Bonito (blogshop), and Deal.com.sg (group-buy). The rest are mostly U.S-based websites.

One interesting finding is that Google+ is actually a more popular service than Twitter in Singapore. 16 percent of Singapore’s “social media traffic” belongs to Google+, which was up from 1.2 percent in August 2011.

For more, you can find Experian Hitwise’s full findings below:

Social Networking

• Singaporeans are notoriously frequent users of social media sites, emerging as the top Facebook users in the world in terms of time spent per session according to an Experian Hitwise report last year. In 2011, Singaporeans spent time on various social media platforms to connect with friends and keep updated on topical news such as the Singapore General Elections and SMRT crisis. Facebook continues to be popular in social networking with website traffic of almost 32 percent. YouTube peaked at second place with almost 21 percent share of visits followed by the increasing popularity of Google+ at almost 16 percent, up from 1.2 percent in August 2011, a month after its beta site was launched.
• Microblogging and community forums such as Twitter and Singapore HardwareZone Community are also gaining ground in the category with a combined website traffic of 6.67 percent.
• Singaporeans have increasingly taken an interest in photography, either as leisure or professional users. It is no surprise that Instagram, a photo sharing application (available on Apple’s App Store) is also listed as one of the most popular social networking apps that Singaporeans use.

Lifestyle and Fashion

• Even though Singapore is a world-class shopping haven, many still love the thrills of online shopping. In Singapore, UK fashion brand ASOS has surfaced as the top website with a 13.22 percent share of visits in the fashion and lifestyle category, outplaying Forever 21 (4.03 percent) which has a store in Singapore. Consumers turned to technology to scour for fashion instead of going to the malls.
• ASOS was also the top search term driving traffic to these websites, followed by mid-range brands including H&M, Forever 21 and Uniqlo alongside luxury brands like Kate Spade, Louis Vuitton, Longchamp, Prada and Gucci (in 12 rolling weeks ending 31st December 2011).
• Singaporeans have been increasingly keen on news and updates in lifestyle as they flock to LookBook.nu to read the fashion diaries of people around the world, as well as HypeBeast, an online magazine that covers not only fashion, but also arts, design, and culture. These websites came third and fourth respectively in the category.
• In the apparel and accessories category, Singaporeans are interested in luxury. BaoTime, a Chinese website featuring a variety of topics on luxury brands (7.05 percent) topped the list at number one. Reebonz (2.82 percent), an online site that sells off-season luxury items at a discount climbed to fourth place.
• Many locally grown blogshops have also sprung up over recent years. Love Bonito, which claims the title of most popular Singapore blogshop, has a visit share of 2.89 percent in the category.

Shopping and Classifieds

• Known to be fond of discounts, Singaporeans are embracing the new group coupon-buying craze. Groupon Singapore and Deal.com.sg are the top two deals aggregators, accounting for 35.25 percent of website traffic of sub-category rewards and directories.
• Singaporeans use the search terms groupon, groupon singapore and deal.com.sg the most to look for good local deals.

Computers & Electronics

• With a number of new devices launched in 2011, Singaporeans have flocked online to search for information, news and reviews about these gadgets. Most of them preferred reading about Apple products with 13.24 percent share of visits for the Apple website. This is closely followed by Lenovo at almost 11 percent in the computers category.
• In the Electronics category Apple remains the top website Singaporeans go to with 18 percent share of visits. Despite its 9.34 percent decrease in share of visits from 2010, the local Apple Singapore is gaining ground at 8.04 percent of website traffic from 0 percent in 2010. Other top websites in this category include Gizmodo, Sony Singapore and Samsung Singapore.
• Top five search terms driving traffic to these websites include apple, samsung, apple singapore, samsung, singapore, and canon.

Entertainment

• Singaporeans keep themselves updated on local, world, and sports news with Channel NewsAsia, ESPN, and Bloomberg.com. These take the top three spots in the entertainment category for television accounting for a total of 50.24 percent share of visits.
• YouTube, on the other hand, is still leading the pack of multimedia channels with 61.69 percent website traffic —- almost 200 percent increase from 2010. YouTube is also the top search term used under multimedia category with a search click of 6.17 percent.
• Singaporeans prove to be unwavering fans of K-pop as clearly shown by 65.49 percent combined share of visits on the following websites within the music band and artists category: Entertainment on XinMSN, AllKPOP.com, and Wonderful Generation, resonating the popularity of the Korean boy and girl bands’ concerts held in Singapore last year.
• Three Similar websites in the second and third spots on the list include Big Bang Updates and SONEms with a combined share of almost 12 percent. Singaporeans type soshified and sonems the most to search for updates and news on their favorite celebrities.

Ensogo CEO Tom Srivorakul

Thailand-based daily deals site Ensogo has revealed that its 2012 goals include maintaining its roughly 90 percent market share in Thailand and expanding its user-base in Southeast Asia beyond 3 million people. That’s what the company’s CEO and co-founder, Tom Srivorakul, told me recently.

The company plans to increase its partnerships with local vendors from 2,000 last year and work more closely with banks, mobile operators, and credit card companies to facilitate deal payment. Tom also wants to integrate hotel booking and restaurant reservation systems into the site, as hotel and restaurant deals are some of its most important and popular – something we see on group-buy sites across the region.

These goals will be made a whole lot easier by the infusion of the cold, hard cash Ensogo received when it was bought by American deals giant LivingSocial in July 2011. The financials of the acquisition were not disclosed, but were rumored to be in the tens of millions of US dollars. Tom says that LivingSocial won out against several competitors for Ensogo, including global deals giant Groupon (NASDAQ:GRPN).

“LivingSocial matched up with our vision the best. They let us keep our mojo and keep innovating,” said Tom. Another advantage is that LivingSocial can act as a crystal ball to see what trends are happening and what works and what doesn’t in the more advanced market of the US. “We won’t make the same mistakes,” he said.

Ensogo’s rise in the last two years is the stuff of tech-geek-entrepreneur dreams. Tom and his brothers launched the company in June 2010 and quickly grew to dominate Thailand’s daily deals market. Tom estimated his company’s market share at around 90 percent. It then expanded to the Philippines, where it is now the market leader, and then into Indonesia through local subsidiary DealKeren (since rebranded to LivingSocial Indonesia). The big payout came when the Washington D.C.-based LivingSocial bought them last year.

Their success is no accident, though – these guys are successful serial entrepreneurs. In 2004, Tom and his brothers founded New Media, Thailand’s first digital agency, and then went on to found Admax Network, one of the biggest ad networks in Southeast Asia and Facebook’s local partner since April 2011.

Tom applied their background in ad research and trusting data to Ensogo:

We surveyed 4,000 people and asked if they would pre-purchase a deal in order to redeem later, if it was available at a tremendous value. A large percentage said ‘yes’. But what really stood out to use was that most people also said ‘Why do I have to wait for 100 people to purchase this deal before I get it?’

So Ensogo never incorporated the model of a certain number of people having to buy the deal before it’s activated.

Another thing they learned from their research is that Thai people are very hesitant to use credit cards online. “So we made sure every payment channel was available,” Tom said. “Counter service to credit cards to bank transfers.” In fact, customers can walk into their head office on Bangkok’s busy Rama IV street and pay cash for whatever they purchase.

They can also walk into Ensogo’s newly opened retail store in luxury mall Siam Center and pay there. Tom adds:

The real purpose of the store is to educate more and give consumers the trust that we have a physical location and they can come in and see us. People say ‘wow,’ because we were born online and we went offline.

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]

via windows8update.com

I’ve seriously run out of ways to begin these “troubled group buy site” stories. But while it seems none of these sites are doing particularly well, there are a few sites we see again and again in the news — that’s not a good thing. This time it’s Groupon’s (NASDAQ:GRPN) ill-fated (or rather, ill-managed) China JV Gaopeng.

Fresh off the heels of its fake-watch-selling scandal, Gaopeng employees have told the National Business Daily the company has engaged in a fresh round of office closings and layoffs. Purportedly on the list are the Wenzhou, Nanchang, and Baoding branches, among others. Gaopeng once had 128 branches in China; according to the employees National Business Daily spoke with, after this most recent round of closings it is left with only 39. Gaopeng reps told the paper this was just normal business adjustment.

Workers like a Mr. Chen were dismissed suddenly, receiving emails that listed the cause of their dismissal as major economic changes that made it impossible for the company to fulfill the employment contract. Employees also received compensation, but some apparently feel it was insufficient.

Groupon’s stock seems largely unaffected for now, but I’m starting to wonder what will happen to it if this China disaster finally blows up.

via DailyDealMedia

Gaopeng, Groupon’s (NASDAQ:GRPN) official China JV with Tencent, has not been working out well. Recently, problems like personnel issues and a shrinking market share have been eclipsed entirely by a fake-watch-selling scandal. It all started a month ago when the company offered Tissot watches for just a quarter of their usual price as a daily deal. Hundreds of customers partook and then discovered that the watches were fakes, shipped with convincing (but also counterfeit) certificates of authenticity.

That was bad enough, but customers pursuing legal action have kept the scandal in the news. China’s Ministry of Industry and Commerce has gotten involved and, in a series of different checks, has invariably found the watches Gaopeng was offering (via one of its vendors) were indeed fake. Most concerning for Gaopeng is that yesterday, Shanghai police reported they were already investigating the case and that they would be looking into Gaopeng’s criminal culpability if the company is indeed found to have been involved in the selling of counterfeit products.

Since the Ministry of Industry and Commerce has already announced the watches sold to consumers that it has inspected were fake, it’s highly unlikely that a police investigation would find Gaopeng to be innocent. But it’s not clear yet exactly what the company’s punishment might be.

Meanwhile, Gaopeng is attempting to place band-aids on the wound by calling customers who bought the watches and offering to up the amount of compensation money they are eligible for, according to at least one watch buyer. Remarkably, though, the compensation they’re offering is still pretty terrible — if customers send back the watches, they’ll refund double the full purchase price.

It’s the second time they’ve upped their compensation offer since the scandal first broke, but at this point it’s hard to imagine the damage isn’t already done. With consumer trust in group buy sites flagging as finacial issues force them to close offices, a full month of news about Gaopeng’s untrustworthy products — and now a possible criminal investigation — things are definitely not going well for Groupon’s poorly-executed excursion in China.

[Via Sina Tech]

Photo via Groupon Korea on Facebook

Here’s some more troublesome news on the Groupon front (NASDAQ:GRPN), this time in Korea. The South Korean Fair Trade Commission (FTC) has reportedly fined Groupon’s Korea office because an employee wrote 147 fake product reviews on the Groupon website, this according the Korean Herald citing the FTC statement (Korean).

The commission has fined Groupon 17 million won (or about $14,773) and has ordered them to display the details of the penalty on its website. I tried to find the notice on groupon.kr but with no luck, though I should make clear I can’t read Korean.

It’s an unfortunate matter for the company which can’t seem to catch a break in Asia. One would hope that its internal culture would be very clear that such activity is a no no, but in this instance at least one employee didn’t get the memo.

The report goes on to say that Groupon was also discovered to have overstated the number of products that it had sold, but it should be noted that there were three other group-buying sites fined for the same infraction.

Readers of our site will certainly be familiar with Groupon’s troubles in other regions. Ranging from staff cuts in China, to publishing customer information online in India, to botched New Year’s deals in Japan — the Asia map is on it’s way to being covered.

On the other hand, it might just be a simple case of mo’ money, mo’ problems after going public earlier in the month.

Groupon (NASDAQ:GRPN) is plagued with a host of problems leading up to its IPO. In the first half of 2011, the company spent an unsustainable $432 million on marketing, $392 million out of the $681 million in liabilities currently owed to its vendors, according to Yipit’s data.

Its triple-digit growth has slowed, leading to a potential 50 percent decrease in its valuation. And we haven’t even started to talk about Groupon’s soon-to-be failed joint-venture, Gaopeng.com, launched in partnership with China’s internet giant Tencent.

Just two months ago at the end of August, Groupon closed 13 of its Chinese locations and fired over 400 full-time staff. Groupon is just the latest example of a Western Internet company to fail in China. Regardless of whether we look at Google’s defeat at the hands of Baidu, or eBay’s failure to compete effectively with Taobao, in the case of Groupon we can see four typical mistakes Western Internet companies make when entering the Middle Kingdom.

1. Arrogance

Groupon faced an uphill battle from the very beginning due to its arrogance. Before Groupon even entered China, the US firm proclaimed that it would become “China’s largest shopping site.” In Europe, Groupon had adopted a strategy of using high salaries to poach competitors’ top employees and assumed a similar strategy would work in China as well.

The company also thought that it could just pay huge sums to acquire Lashou, the largest Chinese group-buying site in order to enter the Chinese market, but was shocked when the Chinese site refused their offer.

An assortment of Chinese group buying sites even went further to join forces and issue a formal statement that any employee who left to work for Groupon would not be hired by any company in their alliance should he or she choose to leave Groupon in the future.

2. Lack of Local Understanding

Groupon’s China head seemed to think that all international markets were alike – what worked in Germany would work in China. One example is Groupon’s sales team in China. At first Groupon insisted that its partnering vendors split profits 50-50, without taking into account the realities of China’s group-buying environment. Given so many existing players in the market, vendors have the upper hand when negotiating with group-buying operators and typically leave their partner only 10 percent of the profits instead of 50 percent.

Local vendors were so taken back by Groupon’s aggressive sales tactics that they often told the company’s sales people to calm down and come back later with more realistic expectations. Groupon insisted on using mass email marketing, despite being warned that Chinese people seldom read that type of email. Such an approach had been successful in Germany, but Groupon ultimately found out the hard way that it didn’t work in China.

3. Misaligned Management Structure

Groupon’s failure to draw more heavily on local talent in its management structure limited its ability to adapt to local nuances and succeed in the Chinese market. Out of Groupon’s senior management team in China, only two members were Chinese: one from mainland China and the other from Hong Kong.

Even Groupon’s operations in more remote parts of China were run by foreigners with limited understanding about the local nuances of the Chinese market. Thus a situation arose in which foreign managers were managing Chinese employees in a Western style and in some cases seeing very low efficiency, because employees did not necessarily respect or feel loyal to their managers. As a result, Groupon experienced tremendous employee turnover.

4. Wrong Choice of Local Partner

Groupon made a very smart decision in partnering with Tencent, which next to Alibaba Group, is a true leader in China’s Internet space.

Where Groupon went wrong was not making use of the numerous advantages a partnership with Tencent has to offer. For example, as mentioned above, rather than rely on Tencent’s local market expertise, Groupon instead chose to hire expats to run its operations all over the country. And for Tencent, the Gaopeng joint-venture was the least of its concerns or priorities. The firm already operated a number of other group buying portals in China prior to the partnership – Gaopeng was one of many.

Groupon China will fail – it’s only a matter of time. From the day Groupon entered China, it has been a bumpy road — one that now appears to be approaching cliff’s edge.

Some analysts say this is the result of Groupon’s overly confident business model. Others say that its failure can be traced to the nature of China’s group-buying industry: with the market already divided among so many companies, even a company as successful elsewhere as Groupon can find its impact limited. No matter which view one ultimately subscribes to, what’s becoming increasingly clear is that Groupon is finding narrowing space for itself in China’s crowded group-buying industry.

See also: What’s wrong with Groupon in China?

This is a part of our TechCrunch Disrupt 2011 event coverage.

#10:28: Aaaand we’re back. After some connection issues, we’re not back in the liveblogging game, coming in a few minutes into a discussion of group buying in China moderated by Bill Bishop (of Digicha) and featuring Xing Wang (Meituan) and Yinan Du (24quan).

Yinan Du is talking about how 24quan wants to bring long term value to vendors by providing them with long term customers. They want people to enjoy the service so they keep coming back.

But how do you measure the value of that? 24quan created a special service to measure and incentivize repeated use by users to ensure vendors get long term customers from the service.

#10:29: Bill Bishop asks, are the profit margins in China group buy so low because of competition, and how do you raise it over time? Xing Wang says Meituan has a single digit margin now, but they expect to see it rise as competitors die off. Yinan Du says their margin is around 12% but the better sales have even higher margins, so they’re focused on making better sales.

Yinan Du: “We actually foresee the margin is going to come back up very quickly.”

#10:30: “How does the industry become more collaborative?” Yinan Du: We actually communicate a lot between companies, and aside from a few bad eggs, most companies are trying to promote a healthy market. But neither he or Wang Xing will name who the companies “disturbing” the sector are.

#10:32: ‘How will the consolidation of the market happen?’ Wang Xing says we won’t see any new entries, and smaller companies will just fade away, but doesn’t expect to see many acquisitions. He also adds, back to the point about profit margins, Wang says it will go up but will never hit 40% like in the US.

Yinan Du is talking about how it’s “winter” for group buy, ecommerce, etc. in terms of capital, so companies need to focus on profit and be able to self sustain. Companies that plan to rely on capital are going to be eliminated in this “winter”.

#10:35: “We strongly believe that if you want to survive in this market, you have to be profitable.” Says Yinan Du. 24quan expects to be profitable next month (i.e. December). Just in time for winter!

#10:36: How can you market going forward, as ad rates rise?’ Wang Xing says Meituan distinguished itself in this area by using mostly word-of-mouth marketing. Says 70% of Meituan users heard about the site from their friends. They have more traffic than other daily deal sites and pay less for that traffic because they don’t do ads.

#10:37: Now on to Groupon/Gaopeng: why are they doing so badly? Wang Xing: “They did so many things wrong I don’t even know where to begin!”

#10:38: Yinan Du: The structure itself got them off on the wrong foot, 50-50 JVs rarely successful in China. He says from the start, the team was too mixed, and driven by profit rather than passion. Du says the real key to success in China is to “find a team that can be bicultural.”

#10:39: Both Wang Xing and Yinan Du say they’ve been educated in the US, so they know a bit about China-US cultural issues.

#10:40: Groupon was rushing from the very start, says Yinan Du. They were more focused on the PR than on the business itself. He says they should have taken much more time to consider the right way to enter China, find the right team, etc.

#10:42: Wang Xing: Groupon had no hope in China from the very beginning. Tencent has its fingers in a bunch of group buy sites, including QQtuan, which they own entirely.

Wang Xing says Meituan plans to be profitable by the end of next year. Hard to grow and be profitable at the same time. ‘It’s easy to be profitable if you cut thousands of people, you’ll be profitable next month.’

#10:46: Is the valuation of Groupon sustainable? Yinan Du: Nope.

Are you planning to go public? Both are cagey. “it’s not about going public, it’s about reaching IPO scale.” says Du. “Maybe 2012 if the market’s good, otherwise 2013.”

#10:48: And that’s it for this session. Pics coming shortly. Next session is at 11:00, so we’ll be back with a new liveblog post then. That session is on ecommerce and how it’s finally taking off in China.

The portal, which is currently in beta, will offer deals in 11 cities including Ahmedabad, Bangalore, Chandigarh, Chennai, Delhi/NCR, Hyderabad, Jaipur, Kolkata, Mumbai, Nagpur, and Pune. The company has also claimed that it has partnered with premium merchants in these cities to offer the best local e-commerce experience.

In addition to the rebranding, the daily deal giant has also announced a new leadership team, following the resignations of SoSasta founders Ananya Babna and Udayan Babna.

The new team will be headed by Ankur Warikoo, who has been appointed as the CEO of Crazeal.com and will be responsible for growing Groupon’s business in India.

Explaining that Crazeal will share the same DNA as its parent company, Groupon Inc, he said:

Having pioneered the online deal industry and emerged as the top player in markets around the world, we are confident that this is the right time for us to provide the discerning Indian consumer with the Crazeal.com experience.

He further added:

We are identifying merchants with high quality offerings, expanding to newer cities and above all enabling Social Commerce to help consumers avail of the best that their city has to offer. We are passionate about bringing quality deals to our consumers, and we feature only those deals that we would ourselves love to buy.

Other prominent members in the team include Bharath Devanathan as the COO and Sachin Kapur as the Head of Marketing.

The company will also sport six sales directors in Delhi, Mumbai, Bangalore, and Kolkata. These directors will take care of building the Local Service, National Products, and National Travel verticals.

Among the merchants who are already on-board the revamped Crazeal include – Cafe Coffee Day, Domino’s, and Claridges for national deals and Kainoosh, Olivea, Crowne Plaza, and Amoda Spa for local deals.

Will It Fare Better This Time?

Groupon India’s earlier avatar, SoSasta.com had undergone a lot of internal problems and failed to make any significant impact in Indian market, since its entry last year.

It was unfortunately hacked and the entire user database including e-mail addresses and clear-text passwords was leaked online.

Adding to the injury, SoSasta founders Ananya Babna and Udayan Babna resigned from the company, followed by a series of top level management people walking out of the company.

And as if that was not enough, the company also faced a trademark challenge by a Bangalore-based company, ValueNet Ecommerce which owns Groupon.in and has apparently trademarked the brand name Groupon, in India.

While Groupon India initiated a case against the latter in Delhi High Court, the latter has also filed a case against Groupon in Karnataka High Court.

Now that Groupon has rebranded its entire Indian business, it would be interesting to see if it will see any success in this new avatar.

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]

DealShelve is a Malaysia-based group deal aggregator which claims that Groupon Malaysia has made more than US$1.55 million in revenue last month. Meanwhile, second place Everyday makes about $580,000, which is approximately about one-third of Groupon Malaysia’s haul.

It is also interesting to note that despite a lower revenue, Everyday has a higher number of sales. Everyday was acquired by Ticket Monster, which in turn was then acquired by LivingSocial. In other words, this is Groupon vs LivingSocial. The same battle taking place in the U.S is being echoed in Malaysia.

Here’s the breakdown provided by DealShelve:

Addy Yeow, the co-founder of DealShelve, told me that his team tracks over 50 Groupon-like sites in Malaysia. The eight listed above are picked because of their high Alexa traffic ranking in Malaysia.

“We do expect a margin of error of less than 10 percent in the numbers, but the leader board ranking is accurate,” he said.

From DealShelve’s point of view, the group-buying craze in Malaysia isn’t over yet. Consumers are loving it and demand is spurring more Groupon clones to mushroom across the country. There is still more to room to grow and aggregators like DealShelve have naturally sprung up to help consumers sort through the clutter.

[Image credit]

Inside sources tell Sina Tech that the company is currently searching for new underwriters to back the IPO, as their current underwriters — Morgan Stanley and Goldman Sachs — are also backing Groupon, one of Laoshou’s competitors (though not a particularly competitive one in China). Reportedly, the company has already found at least one underwriter but is still looking for others. Sources also said that the specific timing of an IPO would be chosen based in part on the fluctuations of the market.

Interestingly, if Lashou were to IPO soon, they would beat not only all of China’s other group buy sites but also Groupon itself to the stock market. Groupon, the American company that first popularized the group buy concept abroad, has delayed its own IPO amid questions about its businesses practices at home as well as in China.

Lashou’s CEO, Goldman Sachs, and Morgan Stanley, all have refused to comment on this story, so for right now you can file it squarely into the “rumors” folder. But to me, this one’s got the ring of truth to it, and assuming the market doesn’t collapse and Lashou can find some underwriters, I expect we’ll be hearing more about this soon enough.

[Via Sina Tech]

Why this rebranding?

There has been a spate of incidents around Groupon India, which has tarnished its image amongst the customers and has led it to lose hold of the market somewhat:

• SoSasta’s User Data Was Compromised – Groupon India’s SoSasta was apparently hacked and its user data was posted online. Many users (including me) received an email from Groupon India asking users to change the password of their SoSasta profile – but that was a password phishing attack. It definitely had a negative impact on the mindset of consumers, many of whom saw their data being published online as a violation of privacy, and an indication of lax security on Groupon’s part.
• SoSasta’s Founding Team Resigned – The founders Ananya Babna and Udayan Babna were reported to have resigned from the board after being asked to do so. This brought a new man to the helm, Ankur Warikoo, previously a consultant at Groupon India, who now sits in the CEO’s chair. The rebranding exercise, with Crazeal as Groupon India’s new avatar, could very well be his idea.
• Groupon India’s business was falling – Snapdeal, Dealsandyou, and Mydala are the current top-rankers in the Indian deal-buying space, and SoSasta is languishing in fourth place according to a study by comScore. With a new name and new management Groupon India aspires to get back in the race again. The one thing I fear though is that even this rebranding exercise might not help much due to a flood of group-buying sites in India. The leaders have already forged ahead, and it will require something unique on Groupon India’s part to pull in customers who may already have their eyes fixed elsewhere.

Groupon is also having a rough time in Chinese waters, and could probably use a rebranding there too. Taking the Groupon premonitions of doom even further is Rob Wheeler in a post on the Harvard Business Review’s blog. He makes two important arguments:

• Businesses should become profitable before they become big – Groupon did just the opposite, and ventured into foreign shores with investors’ money.
• Groupon does not have viable business model – Simply providing deals is not going to make you profitable, especially when you have competitors breathing down your neck with better deals. New ventures like Groupon Now also failed to make profit.

In fact, Rob mocks Groupon’s present condition by writing on their behalf:

Alright, you caught us. We’re actually not making any money. In fact, we are really losing a lot of money.

Still thinking whether the rebranding of SoSasta in Crazeal’s form will benefit Groupon a lot? We’re not so sure…

Before we published this story, we got in touch with Groupon in the UK and in the US to see if we could get a comment on it (Gaopeng.com’s PR team had already told the Chinese media they would not comment, according to Chinese reports). Over the next few days, I receieved several emails from people at Groupon but no actual on-the-record comments, until today I was sent this:

Groupon’s approach to international expansion is to aggressively create a large presence upfront and refine our strategy as we gain deeper insight into the local market. We view any adjustments to the business as very typical in order to build a long-term foundation for success. Our JV in China is just one example of many new markets where we have fine tuned our strategy as we go.

Interestingly, this came just as we learned about a leaked internal communique from Groupon’s CEO that addresses, among many other things, concerns about the Gaopeng.com. Here’s what Mr. Mason had to say:

What about our joint-venture with Tencent in China? Did you read the article that Gaopeng’s CEO has kidnapped the first born children of all our employees and is putting them to work building a laser beam he’ll use to slice the moon in half? It turns out that that one isn’t true either. China is definitely a different market, but every month we inch closer to profitability. As has been our strategy in launching other countries — Germany, France, and the UK, included — our China growth strategy was to hire quickly and manage out the bottom performers. So far, that strategy has improved our competitive position in China from #3,000 to #8. Will we one day reach the dominant status we enjoy in most (come on, Switzerland!) other countries? It’s too soon to tell, but there’s no question in my mind that we’re building a business that will be around for the long haul.

It seems Groupon’s CEO isn’t taking China criticisms very seriously. That in and of itself is sort of concerning. But the explanation both he and our PR contacts give is that their strategy is to hire quickly and then weed out the bad workers later. What neither of them address is how that strategy — if that’s really what’s happening — is backfiring in China.

Why? Well, frankly, it’s a little hard to believe that all that’s happening is a “weeding out” of under-performing employees when whole branches are being closed, and employees are saying they’ve been fired for no reason. Fired employees only tell one side of the story, but with Groupon repeatedly refusing to comment on this — we did ask them specifically about it — most people are bound to conclude that these are, in fact, layoffs.

Even if this is a strategy, it’s not well-designed for China. The result of these cuts has been that many in China’s industry now consider Groupon “tainted”, an unstable place to work. In the West that would be bad enough, but in China, the land of the iron rice bowl, it’s a whole lot worse. I expect that if Gaopeng.com ever wants to expand staff again, they’re going to have serious problems finding qualified employees.

After all, why work for Gaopeng.com and risk layoffs when you can work for one of China’s other, more successful group buy sites? CEO Mason’s email makes it sound like Gaopeng is a rising star in the region, but from the independent research we’ve seen, that’s not the case. In fact, we’re not sure where he got that #8 figure, because in the stats we’ve seen, Gaopeng.com doesn’t even break the top ten.

For example, there’s this iResearch data from a few months ago (remember that groupon.cn is not Groupon China; that domain was registered by a rival company before Groupon could snatch it up):

Or check out these June 2011 statistics from group-buy deal aggregator DaTaoTuan. Gaopeng.com appears only once; in the column indicating the number of deals offered, which is not a reflection of market share or sales numbers.

Note: Gaopeng #12 in terms of market share in June, 2011

Note: Gaopeng dropped out of top ten in sales in June; doesn't appear at all in revenue chart

But if you want the most recent data, it comes from this Hitwise report for the first week of August, 2011 (7/31-8/6). Once again, note that Gaopeng.com does not appear in the top ten.

Now, it’s possible that Mr. Mason has seen more recent numbers than those from a couple weeks ago. But it’s pretty hard to imagine that Groupon could have jumped several steps up in market share while simultaneously firing hundreds of employees and closing 13 branches.

So yeah, I’m worried about Groupon in China. At the very least, it seems its PR strategy needs a little work, but it’s hard to believe there’s not more trouble under the hood that we’re not being told about. Frankly, I’m also a little concerned about Mason’s lengthy memo, which reads much like a letter to potential investors to quiet fears pre-IPO. If the SEC discovers it was Groupon who leaked this memo intentionally, that would be very bad, given that the company is supposed to be in the quiet period before its IPO.

Anyway, we’ll keep you up to date with the latest on Groupon in China. I hope I’m wrong about these problems, but I don’t think I’m the only one who’s feeling pretty skeptical right now.

[Image Source, sort of]

India is no exception. In an effort to sort through them all, DiscountPandit was created to help users track and search these deals, making it easy for users to find relevant deals quickly. Alan DSouza, the founder of the deal search engine, explained to us:

With a growing number of deal sites across the globe and an increasing number of businesses offering deals and discounts through offline and online media, customers are finding it increasingly difficult to find the best deals whenever they need them. DiscountPandit.com is attempting to provide a hyperlocal social deal search engine for users.

Or perhaps you might see DiscountPandit as an aggregator but with a deep focus on building a good search engine for daily deals. So far, deals can be searched based on exact location and deal category. But I’m kinda disappointed that time limits, prices and brands aren’t part of the search criteria.

Here’s a simple flow chart on how DiscountPandit works:

The search works pretty well for now. I’m pretty happy with the results that are presented to me. The design looks alright but somehow I’m finding it a little cluttered — perhaps the narrow width plays a part.

Also, DiscountPandit is providing its own deals – which I find a little unnecessary. I’m convinced that the problem here is about making deals searchable, not creating more deals to overwhelm users. DiscountPandit should definitely spend its resources on search and not creating deals. Just my two cents. We shall see how the start-up work its way up to become India’s local deal search engine. Can they?

But today, Chinese media are again reporting that Groupon China has cut staff. According to Sina Tech, nearly 100 Groupon China employees received sudden employment termination notices from the company late last week, and that was just in the Shanghai office. Nationwide, they estimate that as many as 1,000 employees may have been cut over the past week. But the Global Times cites a laywer for some of the laid-off workers who says that “at least 350 workers” were laid off, so 1,000 may be a bit high. In a separate article, Sina Tech reports the layoff numbers as being “over 400.”

That Sina Tech report and the lawyer quoted in the Global Times, Zhao Zhanliang, both also said that 13 Gaopeng.com branches had been shuttered completely.

However, most of the cut employees were offered two months’ severance pay, according to former Groupon China worker known as “Ace” who spoke with a reporter. This agreement came, however, only after a number of them showed up at Groupon’s offices on Monday demanding a fair severance package after their sudden and unexplained firing late last week.

“Ace” — a source in the article posted on Sina Tech — says he was called into the HR office and directly asked to sign termination papers, format his computer, and delete his fingerprint from the system. The whole process took less than ten minutes, and no reason for the sudden termination was given.

Groupon’s spokespeople in China have thus far refused to comment on these reports, but we’ve reached out to Groupon UK and US PR representatives to see if they can offer any confirmation or clarification.

If the reports are true, this is certainly a dismal sign for Groupon’s future in China. Tencent, Groupon’s local partner in the Gaopeng.com joint venture that is Groupon China, could certainly help out, but they don’t seem to be, for reasons that remain unclear.

So who’s winning? Well, that can change at a moment’s notice. In March it looked like Taobao’s Juhuasuan service had a hefty lead on everyone else. But recent stats tell a different story. Stasticial analysis firm Hitwise China analyzed the overall traffic to Chinese group-buy sites for last week (7/31-8/6) and determined that as far as traffic is concerned, Lashou has surpassed Taobao, and Nuomi and QQtuan have dropped in the rankings. A lot of things have changed since March, it seems.

Don’t believe us? Behold, a chart!

The sudden surge in Lashou’s traffic is probably a reflection of the mega $110 million funding Lashou received back in April of this year. Given that, it’s no surprise Lashou has made it to the top of the traffic rankings. Our sense is that at the moment, Alibaba Group is placing its focus on Taobao and less on Juhuasuan. It will be interesting to see how Juhuasuan will fight back, though.

It’s also worth noting that Gaopeng, a joint group-buy effort by Groupon and Tencent isn’t even on the list. At late July last month, Groupon UK told us that an unspecified amount of staff had been cut, but clarified: “We’re not laying anyone off in China, but terminating some employees for underperformance.” From what it seems, the Groupon-Tencent partnership is going to be another case study of Western company failing to expand to China. Not much damage done to Tencent, though, as it still has Tuan.qq.com under its charge.

[Via Sina Tech]

However, Mydala isn’t one to give up easily and we were told that in the last three months, its web visitor count went up by a whopping 373 percent. It is now ranked as one of the top 100 websites in India by Alexa, the online web ranking service.

So how the hell did traffic surge by such a huge margin? Anisha Singh, CEO and founder of Mydala, told us that she added several new categories to the site such as health, travel, fashion and lifestyle.

That’s not all, of course. Mydala also beefed up its loyalty program to ensure visitors return to the site for more deals and rewards and provide its users with a more personal experience by allowing them to customize their preferences as to which types of deal updates they would like to receive.

The result is a whopping total of three million subscribers, a milestone Mydala announced last month.

Another move made by Anisha is “Mydala Mall,” a new feature which allows merchants to run multiple deals at the same time. Anisha claims this is unique in India.

“With the launch of Mydala Mall, buyers need not worry about missing deals from their favorite sellers, and merchants can explore more engaging, long-lasting relationships with their patrons instead of just one-off deals,”

Things seem to be going pretty well for Mydala so far and we’re looking forward to hearing more from Anisha and friends. Mydala had so far received a total of $2.25 million in funding from Info Edge and founders of CX Partners.

There’s some mixed news for Groupon in the Greater China area today, with the opening of Groupon Hong Kong’s brand-new travel deals section being tempered somewhat by new data from Taiwan that shows the site’s market share slipped slightly – though it’s still number one.

Groupon.hk – which is available in both Chinese and English – launched its travel deals portal (pictured above) yesterday, featuring package holidays, flights, and cruises. The site offers discounts as high as 90 percent on some deals. With some very upscale partners, including the InterContinental hotel chain, Groupon will be hoping that its new segment will bring more big-spending users onto the site.

Meanwhile in Taiwan, July’s group buy market figures show that the whole sector grew by 8.3%. Groupon’s Taiwan operations lost a small amount of market share, and didn’t really ride that growth. Groupon.com.tw retains 47.7 percent of market share there, down from 48.1 percent in June.

Gomaji is a distant second with nearly 24 percent share. The mainland Chinese site Nuomi.com – which has received a lot of investment from the social network Renren Inc. (NYSE: RENN) – is a newcomer in 11th spot in the Taiwan market. Here’s Taiwan’s group buy top eleven:

Statistics for the group buy market in Taiwan in July 2011. Market share as a percentage is shown in the right-most column. (Source: Goodlife.tw)

With LivingSocial set to expand around south-east Asia, almost certainly including Taiwan, the island province’s market will get even tougher.

Groupon’s successes in HK and Taiwan contrast starkly with its rough ride in mainland China, where it goes by the name Gaopeng.com under a joint-venture with Tencent. Just last Friday we reported rumors of job lay-offs and a lack of cash. A Groupon PR rep later confirmed with us that some personnel have been let go, but as part of a routine trimming of underperforming staff, not a restructuring.

[Source of Taiwan market figures for July: Goodlife.tw, via TechOrange]

[UPDATE on July 30th - We've been contacted by Groupon head of PR in the UK who confirms an unspecified amount of staff being cut, but clarifies: "We're not laying anyone off in China, but terminating some employees for underperformance."]

Groupon’s Chinese site is having a phenomenally tough time of late – reportedly today Gaopeng.com is laying off 25 percent of its staff, and we’re hearing rumors of it being unable to pay its Google and Baidu ads bills.

The job losses are reported across the Chinese tech media, saying that 25 percent of staff are being axed at Gaopeng’s offices in smaller “tier three” cites and medium-sized “tier two” cities. Its operations in China’s largest cities seem unaffected, indicating that Gaopeng might need to focus on business in the country’s wealthiest cities, and that it might have over-reached itself initially. Upon launch, Gaopeng’s group buy network extended to 127 cities, and it soon took on some 3,000 employees.

According to Chinese site Techweb, a typical Gaopeng office in a tier two city would’ve had about 50 people, while in smaller cities there would’ve been 20 to 30 staff members.

The cash flow problems remain a rumor. According to Marbridge Consulting Gaopeng is spending 15 million RMB per month on ads, between Google and Baidu, and is unable to sustain such ad spending. That figure could well represent nearly half of Gaopeng’s monthly sales revenue.

If all these issues are confirmed, it’s not clear why Groupon/Gaopeng’s joint-venture partner, Tencent, isn’t stepping up.

Two days ago I looked at stats which showed updated revenue and pricing stats for China’s major group buy sites. In it we saw how Gaopeng was offering a lot of deals last month, but wasn’t able to follow that through in terms of number of deals sold, or monthly revenue.

Gaopeng wasn’t listed in the top ten of group buy sites in China, where Meituan and Tencent’s Tuan.QQ seem to be gaining a stronghold in this highly fragmented market.

For Groupon’s Gaopeng.com venture in China, it’s going to be a tough summer, as we see the average price of deals go down as people opt for cheaper packages. That’ll make it even tougher to bring revenue up. Perhaps such a slim-down and refocusing on China’s tier one cities is the best – or the only? – move it can make right now.

Groupon has also had some setbacks in India too, with its Sosasta.com subsidiary.

[Source: Techweb - article in Chinese]

New statistics from research firm comScore suggest that snapdeal.com is comfortably ahead in India’s group-buying sector after the month of June. According to the report, over 1.5 million* users visited SnapDeal during that time.

We heard just yesterday that the company has raised $40 million in series B funding from a group led by Bessemer Venture Partners. And our readers may remember SnapDeal as the creative company who created a huge buzz around its brand by adopting an entire village, Shiv Nagar, and renaming it Snapdeal.com Nagar.

Taking the second and third spots in the comScore list were Dealsandyou and Mydala respectively, both chalking up just under a million total uniques.

In the fourth spot is Sosasta, the service acquired by Groupon at the beginning of the year, but which has seen more than its share of troubles since then. Sosasta inadvertently published its user database on its website last month, and since then the Groupon logo has mysteriously vanished from the Sosasta site although reports say that Groupon attributes this to legal issues rather than a desire to disassociate from its newly acquired subsidiary.

Here is comScore’s top ten list of coupon sites for India. We expect that other metrics will vary, but it’s a good general indication of what’s happening in the nation’s group buy space. Nonetheless, we’d love to get our hands on some more statistics, especially after we saw impressive subscriber numbers from Mydala just a week ago.

*comScore says that this data “excludes visitation from public computers such as Internet cafes or access from mobile phones or PDAs.”

It’s tough being a small fish in a crowded pond – which is likely how many of China’s group buy sites are feeling. They’re seeing average deal prices fall, and it’s crushing revenues for some. But Chinese giant Tencent, with its tuan.qq.com (pictured above), looks to be gaining a reasonably strong hold of this highly fragmented market.

New stats from group buy deal aggregator DaTaoTuan show trends across pricing and market share for last month. When compared with May’s report, it paints a nicely detailed picture of the very tough competition.

It has also identified the issue of “re-targeting” – whereby a successful deal is copied by other group buying sites.

Before looking at the full slideshow, here’s the graphic showing market share in June, with a comparison to May’s numbers. It shows that the Tencent deal site rose to 10 percent market share, while Lashou – which secured US$110million in funding earlier this year – had a bad month to slip to tenth place. Manzuo had a good month.

Looking at the broader picture, and especially at revenues in June in the group buy sector, we see tuan.qq.com topping the number of offered deals as well as revenue, and coming second in terms of sold deals. Gaopeng – the actual Chinese Groupon that’s not to be confused with the shanzhai groupon.cn – seems to have had a lot of offered deals, but wasn’t able to follow through with sold deals or actual revenue.

Dig around in the slideshow, and you’ll see how consumers are opting for cheaper daily deals, which is driving down the average price of deals – though the discount rate looks stable – and hurting some of the sites.

[Source: Dataotuan.com]

MyDala.com

Founded by Anisha Singh in November 2009, MyDala.com has grown from a four-employee team to a size of 60 today. Singh thanks her loyal users for MyDala’s success, saying:

Anisha Singh, CEO and Founder of Mydala

We owe our success to all our subscribers and well-wishers who have continuously supported us and recommended us to friends and family.

We are witnessing an all-round growth which is not just limited to traffic rankings. We have sold more than 350,000 vouchers to date through our partnerships with more than 8,000 popular merchants across India.

MyDala is frequently visited, with over 250,000 visitors per day. Singh’s start-up has so far gotten funding of Rs. 9 crores (US$2 million) from Info Edge (owners of Naukri.com, a popular job portal in India) and Rs. 1.1 crores (US$250,000) from the founders of CX Partners, a $600 million private equity fund.

Other popular daily deal sites in India include Groupon’s Sosasta, which recently had a huge security blunder, and SnapDeal which recently had a town named after it. LivingSocial hasn’t really entered the Indian market yet. Perhaps, getting acquired by LivingSocial could be one of the possible exit strategies for MyDala.

As explained by DealKeren’s Managing Director, Adrian Suhermanat, at the IDBYTE workshop yesterday, the company’s market size reached 65 percent in May 2011 (see chart below, DealKeren internal data).

Considering the current growth in the social media space, the market potential for group buying websites is still huge. The market size is roughly only around USD 400,000 per month, so there’s still much room to grow. It’s no wonder that so many new players from home and abroad are looking to compete in the area.

Over the last three months, three international buying group players have entered the market: Groupon (which acquired Disdus in April), Maiplay (the Indonesian version of PlayHawaii), and LivingSocial (acquired DealKeren in June). Local players are also growing rapidly from less than ten players in 2010 to more than 30 players as of June 2011. This will make the competition tougher for DealKeren and for other players too.

Before we even started talking about Dealised’s plans in Asia, the confident-looking CEO, Jonathan Marchbank, shared a little bit more about service. One thing to keep in mind is that Dealised isn’t a group buying site. Rather, it offers group-buy technology and solutions for large corporations which hope to offer daily deals, or at the very least open a new revenue stream through e-commerce.

Dealised’s clients include The Daily Telegraph in the UK, Mecom from Scandinavia, and Spreets from Australia which was acquired by Yahoo! for US$42.9 million in 2009. The technology solution it offers includes mobile (both feature and smartphone), electronic direct mailer (eDM), web, and analytics.

Friends with Groupon and Livingsocial

Dealised is in no way a competitor of group-buying sites like Groupon and Livingsocial. Marchbank explains that Groupon and Livingsocial are disrupting technologies which have caused large corporations to rethink their strategy. For example, merchants would rather put up a deal on group-buy sites than advertise in a newspaper, shrinking the ad revenue pie within the traditional media industry.

Marchbank also feels that big players like Groupon and Livingsocial are important because they educate the market, which in turn helps large corporations to understand the group-buy industry better.

Mobile, Southeast Asia, and India

Dealised has team members based in Europe, India, Singapore, and Australia. Mobile is something that it will be focusing heavily on.

“We believe that mobile is rising fast in Asia, and mobile commerce will be part of the growth too. Everyone will want to ride on the wave,” says Marchbank. He specifically pointed out Thailand, Indonesia, Malaysia, and India as Dealised’s primary markets.

There are multiple ways for Dealised to work with various partners. For example, a supermarket could leverage on its customer base to share relevant deals from an external group-buy site, and as such earn a cut from each deal sold. Alternatively, the supermarket could also employ Dealised’s technology to sell its own products through eDM or SMS.

For Dealised, working with telcos is also a crucial part of its key strategy. Its lead investor, SingTel, is the largest telco in Singapore with a wide network and presence in India, Malaysia, and Indonesia. In Singapore alone, SingTel has over three million customers which constitutes about 60 percent of the entire population.

“SingTel has wide reach in Singapore. It could offer deal services to its huge client base,” said Marchbank.

However, Marchbank explains that Dealised is also open to work with other telecoms groups. “We will leverage on Singtel’s network and expertise but we are also open to working with others if the opportunities arise. We don’t have any exclusive clause with SingTel.”

China and Japan have to wait

“They are huge markets, but if we focus on too many countries we will spread ourselves too thinly,” he explains. While China has a huge mobile user base and e-commerce culture, Marchbank feels that it is a market that is hard to enter if you have few contacts.

He explained more about DealKeren as a social commerce platform, which he believes is a differentiating factor from the other e-commerce players. As outlined in the company’s statement, social commerce is e-commerce that involves the use of social media to support the online buying and selling process.

Suherman then shared some statistics about DealKeren. The Indonesian group-buying site started in August 2010 in Jakarta with only 10 employees. Today DealKeren claims to be the market leader among group-buying sites in the nation with 65% market share. With 90 employees, DealKeren has so far expanded to 4 major cities, attracting over 300,000 members and 300 merchants. 55% of their members are female, between the ages of 25 to 35 years old.

Why DealKeren accepted Livingsocial’s offer

Suherman explained that Livingsocial is the second largest group-buying site in the U.S. Since its was founded in July 2009, it has expanded to over 250 cities in 14 countries, across four continents with 1,500 employees worldwide.

With those stats, DealKeren accepted Livingsocial offer in an effort to accelerate growth. Both LivingSocial and DealKeren share the same drive, values, and goals. With access to more capital, DealKeren can now take more daring steps and expand even faster than before. Being part of Livingsocial also means that DealKeren can leverage on its regional and global market presence.

Adrian Suherman also explained that DealKeren will follow Livingsocial’s model, namely on the following deals categorization/features:

• Escapes: providing unforgettable experiences
• Adventures: providing unique produced experiences
• Families: providing family experiences
• Instant: real-time deals around your neighborhood [based on location]

With a proven business model and technical support from Livingsocial, DealKeren will be a very competitive with rival Disdus. With a end-of-year target of one million members, DealKeren also hopes to expand to cover more customer needs in addition to just providing deals for food, fun, travel, and beauty.

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.

Sosasta inadvertently left SQL database files publicly accessible on the web. The data included email addresses and password info for the service’s 300,000 users, but apparently no credit card information. Groupon has issued a (relatively quiet) statement on the incident, though we aren’t aware of any disclosure published on the Sosasta or Groupon websites:

After being alerted to this issue by an information security expert, we corrected the problem immediately. We have begun notifying our subscribers and advising them to change their SoSasta passwords as soon as possible. We will keep our Indian subscribers fully informed as we learn more. SoSasta runs on its own platform and servers, and is not connected to Groupon sites in other countries. We are thoroughly reviewing our security procedures for SoSasta and are implementing measures designed to prevent this kind of issue from recurring. This issue does not affect data from any other country or region.

Sosasta is also taking inquiries via its customer support line if any customers still have concerns.

The database was discovered by Australian security consultant Daniel Grzelak (@dagrz) who got in touch with the website Risky.Biz, who in turn informed Groupon. Both Sosasta and its parent company can consider themselves lucky that it wasn’t a more mischievous hacker that discovered the file. But then again, who’s to say that this didn’t already happen before Daniel found it?

[Source: ZDnet, photo campaignindia.in]

LivingSocial just acquired Ensogo, DealKeren, and GoNabit, reported Reuters. The acquisition also pushes LivingSocial’s presence from 13 countries to 21.

Ensogo first launched in Thailand in 2009, and eventually grew to be the largest group-buying site in the country. Ensogo then started its operations in Manila in July 2010, where again it repeated its homegrown success to be the top group-buying site in the Philippines. Ensogo also owns DealKeren, a popular group deal site in Indonesia. Thus, acquiring Ensogo gives LivingSocial a strong presence in three countries instantly.

GoNabit is based in the United Arab Emirates. Founded in January 2010, the company is the first group-buying site to set up operation in Dubai, Abu Dhabi, Lebanon, Jordan, and Kuwait. GoNabit also provides its service in Arabic, a key factor for reaching out to more consumers in Middle East.

The acquisition is a good indication that LivingSocial is finally taking an interest in Asia. Hopefully, some of the group-buying clones which missed getting acquired by Groupon can have a second chance to exit in style with LivingSocial.

LivingSocial currently has 39 million subscribers and 2,000 employees. It received US$400 million in funding back in April, which rocketed the company’s valuation to a whopping $3 billion.

Indonesian LA Lights IndieFest is launching an interesting Groupon-style ticket buying campaign for its 2011 Festive Sound, a concert to be held on July 9, 2011.

The digital campaign is using a Groupon-like mechanism which will enable people to buy a ticket at a cheap 100,000 rupiah (equal to 11USD). Considering that international artists like Boyce Avenue (a YouTube sensation) and Spin Doctors will be performing, it seems really like a good deal. Many great local artists will also be performing, including Barry Likumahua Projects, The Groove, Gugun and The blues Shelter, Superman is Dead, The Trees and The Wild, Pee Wee Gaskin, and Saint Loco, just to name a few.

If you’re interested, you simply just need to enter your details and login using your Facebook and Twitter account. You can buy up to ten tickets per transaction, making it easy to buy the tickets as a group. Once the transaction is completed, you will receive a voucher with a unique code that can be redeemed for ticket(s) on concert day.

The only thing that worries me, however, is the existence of a middle-man seller. He or she can leverage the loophole by purchasing the tickets in bulk and markup the price after the presale session ends. Group-buying makes it easy to buy the tickets at low and sell them at high. Nevertheless, this is a pretty good example on how brands can adopt a start-up mechanism to improve their business or at least, experience.

Q: What do you think about group-buy and coupon services?

Well it turns out that Groupon is reaching a decent audience in Japan and Taiwan, with almost 1.6 and 1.2 million visitors respectively. See the chart below to view the entire top ten list. Then skip to the bottom, because we have a question for you.

data from comScore

What group buy or coupon site have you used most recently?

To date, Tencent’s has made a total investment worth about 2 billion yuan. Some of these investment include U.S-based Riot Games, Huayi Brothers Media, and Elong, a China-based online travel company.

But that doesn’t seem to be enough for Tencent as Bloomberg reported this morning that the Internet behemoth will allocate an additional five billion yuan to its investment fund. For the math-impaired out there, that totals a whopping sum of 10 billion yuan.

This boost in funds demonstrates Tencent’s commitment towards expansion by acquiring and investing in potential firms. It is also worthy to note that Tencent is one of the investing partners in A-Fund, together with companies like GREE and KDDI. A-Fund is a fund focusing on Android-based applications. Other notable partners for the company include Groupon, Nokia, and Intel.

With immense competition and hundreds of Groupon clones lurking around the world, every clone needs to somehow find a way to differentiate itself from the crowd. Snapdeal.com, an up-and-coming India-based groupon clone, funded by Nexus Venture Partners and Indo US Venture Partners, has found a unique way to stand out from the crowd, and do some good in the process. The company has adopted a village called Shiv Nagar in Uttar Pradesh, India and renamed it to Snapdeal.com Nagar.

The one-year-old online group-buying start-up will develop the village’s infrastructure, including installation of water pumps and support of the local school and hospital. Shiv Nagar’s residents, many of whom have not even heard of e-commerce or the Internet, have decided to take on the company’s name as an expression of gratitude.

Snapdeal is one of the pioneers in the Indian group-buying deals realm with $12 million in funding and over five million subscribers.

Kunal Bahl, CEO of Snapdeal.com, believes that this is the company’s way of giving back to the society:

We are glad to contribute and support the villagers in various infrastructure needs such as creating provisions for drinking water, and also help them with necessary inputs for their upcoming school and hospital in a long term association with the community.

Maiplay originates from Hawaii as PlayHawaii. Much like other group-buying sites, it offers deals from restaurants, spas, entertainment merchants, many more. We got in touch with Jon Sugihara, CEO & Co-Founder of Maiplay and PlayHawaii to learn more about the service and his plans in Indonesia.

1. Maiplay just launched in Indonesia, but Groupon is already here. What are your thoughts on this?

One of the challenges to group buying is that there is no customer loyalty. They will buy with whoever has the best deal that day. We have been able to compete with and beat Groupon consistently in Hawaii by providing better deals and we are confident that we can do this again in Jakarta. We have already featured a number of the best restaurants in Jakarta.

2. I know you must be tired of answering this question, but what’s the difference between you and other Groupon ‘clones?’

Our focus is on quality and great deals, both for the merchant and for the customer. Our other differentiator is the value we add to the merchant. We have a number of services and products that the customer does not see that help the merchant to get a clear picture of how their promotion did. Our competitors disappear as soon as the deal is signed, so most businesses are in the dark as to what they got from a promotion. We focus on engaging with the customer and getting them to return to the business after the initial promotion.

maiplay.com

3. If you plan to expand across Indonesia, how do you scale and put your presence across all cities?

The biggest challenge to scaling is finding sales people and managing those teams across larger geographies. We have a number of methodologies and tools that allow us to track the performance and support our teams from anywhere in the world. We have been doing this for almost 2 years, so we have had a lot of time to learn from our mistakes and grow.

4. I heard that one of your backers is Eduardo Saverin. How does he help your start-up?

Eduardo Saverin is helping us as an advisor. Eduardo is very strategic for us as the core principal of group buying is the social aspect of sharing deals with friends. Over 30% of the traffic to each of our deals come from social networks, so it is imperative that we have solid integrations with these networks. Eduardo is helping us to build strategies on how we can maximize Facebook and other social media.

5. Finally, what is your target and plan for Indonesia this year?

We believe the potential market for Jakarta alone could be over USD$12m/year as long as we can convince consumers to spend money online. There is a target population of over 2m users that fit into the initial demographic of users that we are targeting. These are young professionals with disposable income. They love to go out and try new things and are computer savvy.

Catch more of our interviews with founders and thought leaders here.

Behold. Sorevo, a group-buying site which offers premium-products-only was recently launched in Japan. Like most group-buying site, offers for these premium products only come to fruition if enough orders were accumulated within a limited period of time.

The first product featured on Sorevo has already captured much attention: It is an iPhone case of the popular animation “GUNDAM,” specially designed by Kunio Okawara (check out his profile on Wikipedia), a famous designer in the Japanese Anime industry. Each case also comes with an unique serial number.

Going Social

Grand Design & Company, the brain behind Sorevo has gained much success marketing products in Japan. Its achievements include “LagunaMoon,” a popular brand among young Japanese girls. However, as things are pretty much done in the traditional way, and coupled with the rising popularity of social media the company seeks to explore social commerce.

Sorevo, a name inspired by “social media revolution,” is an effort by the company to create a marketing channel powered by social media. Unfortunately, the company didn’t reveal much about how it plans to make Sorevo a success, but it did say that it has a goal is to hit 1 million users within a year before expanding the business to other Asian markets.

Stay tuned.

Groupon enjoyed a good two year head start in the group buying industry, but is now facing stiff competition not only from Amazon-invested LivingSocial but also India’s group buying site SnapDeal.com.

SnapDeal has surpassed LivingSocial in terms of traffic and is steadily catching up with Groupon, according to Amazon’s Internet traffic monitoring site Alexa.com.

As Groupon expands globally, it needs to keep an eye on SnapDeal. It has already started operations in India with the acquisition of SoSasta, but SnapDeal continues to lead in the country.  SnapDeal is a huge competitor for Groupon and if it wants to remain global leadership, it has to withstand this challenge

This is reminiscence to the battle between Facebook and Orkut in India, which the world’s largest social network took nearly four years to claim leadership in the Indian market. Groupon is now facing a similar test.

The competition is only going to get more intense as more players are jumping into this lucrative market. We previously wrote about Times Group’s entry into the group buying market with the launch of Timesdeal.com. That company’s media prowess shouldn’t be underestimated as it has the greatest reach in India, with print/TV/online media triple threat.

Times Group owns IndiaTimes.com, the biggest Internet Portal in the country along with top print newspapers, Times of India and Economic Times. The group also owns top news channels – ET Now and Times Now.

As Penn Olson contributor, Keith Toh previously wrote, “For a small country like Singapore, it is surprising that we have 46 group buying websites with four already in the deadpool. The number of Groupon clones in Singapore is about twice the amount in Indonesia. It can’t be blamed: The astonishing revenue growth of group buying website compared to other traditional online businesses has attracted many to jump into the bandwagon.”

Instead of creating a brand new group-buying site, Singapore-based online news media, AsiaOne announced its partnership with Outlet.com.sg to syndicate its group-buy offers on its site. Leveraging on its wide readership base, AsiaOne, owned by Singapore Press Holdings (SPH), hopes to monetize its traffic. The announcement didn’t state the business part of the partnership. But it is logical and safe to assume a revenue-sharing model between both companies.

The group-buying business is pretty well understood. Just in case you’re still confused about how it works, Outlet.com.sg has this nice video to explain things:

“We are very excited about this partnership. Outlet.com.sg hopes to reach out further to PMEBS [Professionals/Managers/Executives/Businessmen] through AsiaOne’s extensive base. Our goal is to make this city the best place to work and play hard in by scoring deals you simply can’t resist. Now, city dwellers can enjoy our deals via AsiaOne’s website too,” said one of the co-founders of Outlet.com.sg.

The partnership surely makes Outlet.com.sg happy. But I wonder if the happiness would be short-lived. With Groupon Singapore established, it is tough for the rest of the group buying clones to find an exit, especially when there are 46 of them. These group-buying clones could wait for LivingSocial to perform the same wide scale acquisition or get acquired by a traditional e-commerce company.

For a small country like Singapore, it is surprising that we have 46 group buying websites with four already in the deadpool. The number of Groupon clones in Singapore is about twice the amount in Indonesia. It can’t be blamed: The astonishing revenue growth of group buying website compared to other traditional online businesses has attracted many to jump into the bandwagon.

The beauty of the group buying business can be summed up in these 5 points:

1. Simple technology
2. Holds no inventory risk
3. Getting commission up to 50%
4. Able to collect commission immediately without the need to give merchants 30 days credit term.
5. Low cost per account acquisition thanks to social media and friends recommendation to ensure a deal goes through

The simplicity of this model has resulted in spinoffs from big players like InSing, Mocca, CozyCot, HungryGoWhere, Reebonz and even retail giant, Courts.

On paper, these big boys definitely have the resources and database to easily trample over their smaller competitors. However, if you check their website you realize they don’t sell as much as their so-called smaller competitors. Here are several possible reasons why the big boys’ spinoffs are not doing as well as they should:

1. Lack of a dedicated sales team to bring in the deals
2. Passion and execution for the spinoff aren’t up to standard. The product person might have other products to focus on
3. Competitive rates from overwhelming group buying sites make the business less profitable as a whole

The low barrier of entry makes the market a tight place to hang around for long. Anyone can create a group buying website by just paying about USD 200 for the script and have it installed. What’s left is to do is to link up with the merchants for deals.

With so many group buying sites in Singapore, merchants and consumers are spoilt for choice. Instead of paying the big boys 40-50%, they can pay the smaller group buying site at a range of 10-15% and probably get the same effect.

This makes it harder to move beyond the low commission range as there will always be newcomers coming in to earn quick bucks. Thus spinoffs are unable to make a decent profit for the amount of resources they commit.

Singapore is not known to have so many dot com companies created in such a short while. But with the introduction of Groupon’s concept, many dot coms have sprung out from nowhere.

Some may hope LivingSocial will buy over them when they come into Asia. Some may hope to secure some funds to carry on the fight. While some might just enter the deadpool. It will be interesting to see how this competitive group buying industry will pan out in Singapore.

Turned out, most of the panelists voted for social e-commerce. Steven Goh of Mig33 led the discussion as he explained that there are a lot to explore in this young social commerce sector. The social e-commerce is likely to follow the same growth trend as social gaming.

Without a doubt, social gaming is leading the social ecommerce front as it naturally has a robust in-game buying system driven by game mechanics and social influence from the community. James Gwetzman of Popcap said that his company is still very much like a game maker and it would be great if the company could combine data and revenue making features within a game. Gwetzman pointed at DeNA and Zynga as leaders in gaming data and revenue making, respectively.

The social layer on the Internet has more or less taken shape. Now, the next layer could be the commerce layer. In fact, Groupon has already taken advantage of the social layer through group buying. Facebook tries to sell credits and Facebook store front while Twitter hinted last year that it could go into songs with Ping.

While social ecommerce is hot, Harry Xiao, CEO of d.cn said that he would prefer to build a company that provides a better smartphone interface. He explained that the current smartphones interface are good but challenge the very way it is structured right now. “Mobile is going to be huge, but can we do better than what we have?”

It is a pity that the discussion didn’t have the chance to expand and go into depth as the panel ran out of time. At least, in this short five minutes discusssion, it highlighted the potential of social ecommerce ahead.

Throwing the question back to you: What would you build if you had $5 million? Share with us your thoughts via the comments.

Breaking news this afternoon from our friend Gang Lu over on Technode. He is reporting that group buying giant Groupon.com acquired Groupon.cn in a deal “signed today.”

The latter is one of many Groupon clones in China that made up crowd of competitors for the original Groupon, which recently entered China as Gaopeng.com. According to numbers from iResearch earlier this month, Groupon.cn was bringing in about 18.77 million monthly visitors.

This raises the question of how Groupon will manage it’s new Chinese domain surplus. Will they jettison Gaopeng.com? We’ll have to wait and see how this domain dilemma plays out.

Groupon gettin’ busy in Asia

Groupon has been working hard to make progress in the Asia region this year. In mid-March the company launched Groupon Korea at the groupon.kr domain. And then this month the company also acquired Disdus in Indonesia. Groupon faces a similar “attack of the clones” there.

Back in January, Groupon picked up Malaysia’s Groupmore as well as India’s SoSasta. And before that in December, Groupon acquired Singapore’s Beeconomic, Taiwan’s Atlaspost, and Hong Kong’s uBuyiBuy.

Now he’s back in the hot seat for some questions regarding AkuPlusKamu, one of the many Groupon-type sites providing deals to Indonesia.

Even though Groupon acquired Disdus, there are still much drama left to play out in Indonesia when it comes to the deals and promotions space. In this interview, we will learn more about AdaDiskon’s growth and views about the online discount industry as a whole.

1. What’s the current situation the the company?

AdaDiskon’s current situation is great. I’m very happy to say that all aspects (team, revenue, traffic, partnerships, etc) are growing really fast.

2. AdaDiskon has proved to be one of the best sources for promotions and deals.  How does this make you feel?

Thank you so much for the kind words. AdaDiskon has been growing really well, especially in the second half of last year. But we never take that for granted. There are still so many aspects of AdaDiskon that still need to be fixed.

Over the past year we have learned so much about what works and what doesn’t. We are in process of revamping both AdaDiskon’s back-end and design. Our audience can expect a drastic improvement.

3. It has been months since the partnership deal with Yahoo! Koprol. What can you tell us about it?

It has been really great!. The Yahoo! Koprol team, especially Fajar, Satya, Daniel, Aryo, and Della, have been such a great partners to us and I am really happy to be working with these guys.

They are the first partners to use our new geo-location API and it has been great. We are seeing a lot of interaction and engagement with our content in Yahoo! Koprol. Koprol users can expect more content integration in the future.

4. AdaDiskon launched AkuPlusKamu, but some critics say that it will be just another Groupon clone. What are your thoughts?

I think that cynicism is justified. There have been so many GroupOn clones in Indonesia that it is hard not to think that way. But I personally think these critics should really just take it easy. Out of those 28 clones, there are probably only three or four clones in Indonesia that can be considered upper-tier clones. They are playing a big part in advancing our overall digital media industry.

I’m not surprised that there are a lot GroupOn clones. It is a business where the barrier-of-entry is really low. But what many don’t know when starting out is that the barrier to scale in social buying is really high. AkuPlusKamu is still in the testing and starting out phase of laying out all the groundwork, so the main differentiation is still seen as a feature as of right now. Within the next couple of months, we will be introducing more and more innovation in the social aspect of social buying.

5. How can AkuPlusKamu benefit from AdaDiskon?

AkuPlusKamu is AdaDiskon’s e-commerce program and they really complement each other really well. Having AdaDiskon allows us more flexibility to play the game a little bit differently compared to everyone else in the field.
GroupOn has been around since late 2008, and there have been many changes in trends and advancement. I see that it is [now] the best time to innovate above this social buying concept.

6. People have been saying that money and funding are crucial for Groupon clones to survive. What do you say?

Absolutely, the barrier to scale in this business is very high. The amount of resources that is needed to scale and operate is really high particularly in Indonesia where the purchasing power of the target market is quite low compared to other countries in the region.

7. Last question, what’s your target for AdaDiskon and AkuPlusKamu in 2011?

We will keep on growing and improving AdaDiskon and AkuPlusKamu in 2011. AkuPlusKamu is one of AdaDiskon.com’s business models and there is still one more business unit/division that we will introduce before the year ends. There are so many other exciting things in development for both AdaDiskon and AkuPlusKamu and we’re really excited to announce them when it’s ready.

China’s popular daily coupon website, Lashou.com, has announced it has raised $110 million in a third round of funding. Milestone Capital and a number of other investment firms have brought Lashou Network Technology Co. into tight competition in the increasingly crowded Chinese group-buying market.

Even though Lashou was only founded a year ago, its total venture capital value now stands at around $1.1 billion, which gives it more funds than other group buying companies in China. Richard Lim, a managing director of GSR Ventures said that Lashou has grown faster than Groupon, the world’s leading group-buying site which entered China earlier this year.

We won’t be surprised to see fierce competition among Chinese group-buying companies in the future, as share prices are soaring high and the competition for mindshare with Taobao, Meituan, and Groupon.cn grows more intense.

On a related sidenote, we also reported last week that Lashou was one of many group-buying sites that has partnered with Shanda Interactive to show deals in its new Tuanyouhui group buy directory.

Penn Olson’s Joshua Kevin recently wrote about the Groupon clones in Indonesia: “The number of Groupon clones that have mushroomed over the years is amazing, and I believe  it’s just a start. The question is how many would survive once the real Groupon enters Indonesia? Which Groupon clone will get acquired and which will perish?”

We got the answer today, fresh from the oven, as I just ended my call with Jason, co-founder of Disdus.

Groupon has acquired Disdus, one of the largest (if not the largest) Groupon clones in Indonesia. The acquisition amount is undisclosed.

“We were in talks with Groupon for the past 2 to 3 months, mainly to settle legal and terms within the deal. It was officially closed about a week ago,” said Jason through a phone call.

The acquisition is similar to Beeconomics (Singapore) and Groupmore (Malaysia). “Ferry and I will be running the company as usual,” said Jason.

“We plan to increase market share by educating more users and expanding to more cities. The current site will eventually follow Groupon’s design. For now, it will still be operating under Disdus.com. We will also follow Groupon’s best practices in our daily operations,” Jason told us when asked about Disdus’s future plans.

“Within months of its launch Disdus quickly became a market leader and a first-class example of collective buying,” said Rob Solomon, president and chief operating officer of Groupon. “Groupon Indonesia will leverage the power of the Groupon network to further shape the way local merchants market themselves to customers throughout Southeast Asia.”

Groupon owns the domain Groupon.co.id which is currently redirected to Groupon.sg. So, there you go. Disdus emerged as the winner among the Groupon clones in Indonesia.

Update: Groupon acquired Disdus. We confirmed it with Jason, co-founder of Disdus.

Currently, Indonesia has 23 active Groupon clones. Here’s the list compiled by Natali Ardianto. Yes, it’s quite a number of clones, but most people can only name a few of them. For example, DisDus and Lapar are some which I can remember off the top of my head.

We have covered the clones in China here, but what about Indonesia? Allow me to introduce some of them.

As reported live by our very own Willis Wee during Jakarta Ventures Night, Disdus is the largest group buying site in Indonesia, hitting 140,000 unique visitors this month. Disdus also plans to expand to other cities in Indonesia and we can expect more growth from Jason and his team. Lapar.com, which means hungry in Indonesian,  has 8,800 members and 44% of them are said to be active members who deposit money into their accounts. A total of 500 million IDR was saved from all coupon sales.

Even one of the top discount sites in Indonesia, AdaDiskon followed the “Groupon trend” by launching AkuPlusKamu (translated as MePlusYou). AkuPlusKamu is basically a Groupon clone powered by social media. On Twitter and Facebook, AdaDiskon has gathered over 94,000 and 54,000 bargain hunters, respectively. In my opinion, I don’t see why AdaDiskon can’t compete with the big names given the sheer size of bargain hunters it has gathered on social platforms.

More clones, more deals, more confusion. SuperBestDeal, the Groupon clone aggregator came into play. Launched early this year, SuperBestDeal aims to aggregate all the Groupon clones deals to provide a one-stop service for Indonesian bargain hunters.

The number of Groupon clones that have mushroomed over the years is amazing, and I believe  it’s just a start. The question is how many would survive once the real Groupon enters Indonesia? Which Groupon clone will get acquired and which will perish? It’s interesting to see how this will play out. We’d love to hear your opinions. Leave your comment below.

China Internet Watch created a chart to highlight the top Groupon clones in China based on web traffic in January. Ju.Taobao.com (Ju Hua Suan) led the clones with over 75 million visits in January.

Despite starting just March last year, Ju Hua Suan managed to record a US$30 million of total sales in 2010 (Can Gaopeng match that?). The average spending per user was about $6 last year. I believe the statistics are definitely much higher now. Lashou.com ranked second, falling short of 30 million. Groupon.cn, the clone that forced Groupon to adopt a different domain name ranked fifth with 18 million visits.

I’m betting on Alibaba’s Ju Hua Suan to win the race. It is more than just the high traffic growth that the site is currently experiencing. Taobao’s management is strong. Or rather, I have strong faith in the entire Alibaba Group’s management. While most e-commerce sites in China invest on advertising to bring in sales, Alibaba Group focuses on security and fair-trading within all its e-commerce properties (here and here).

As an e-commerce site in China (you know what I mean), building consumers’ confidence is top priority. The transparency within the organization is reflected in its day-to-day business dealings. That gained a lot of respect. Somehow, I have a gut feel that the conflict between the Groupon and Tencent would torture the partnership long-term. Understanding China isn’t as simple as flying over to the country, saying sorry and getting work done.

Also catch: A Summary of China’s Internet Clones [PIC]

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The partnership between Groupon and Tencent, Gaopeng.com has finally started offering deals in China. For the time being, deals are available only in Beijing and Shanghai. The deal offers started today with Gaopeng sending an update at 0001 hours via China’s Twitter, Sina Weibo. The update introduces Gaopeng’s new water leisure park deal and indicates that fans that retweet the message could stand a chance to win a Gucci wallet.

Within hours, the update was shared over 500 times and attracted more than 50,000 fans on Sina Weibo. Besides Shanghai and Beijing, Gaopeng will also be starting group deal service in another 9 cities including Shenzhen, Guangzhou and Chengdu.

The speed of launch somehow surprises me, especially after the conflict between Groupon and Tencent. Tencent insisted that Gaopeng should adopt a localized Chinese look-and-feel while Groupon wants it westernized. The end result seems quite balance. The site looks authentically Groupon. Let’s see how it fares in China.

An Indonesian friend of mine told me about IndoGroupon.com. Could it be Groupon Indonesia? That was the first question that came to mind. I logged on to the site and saw a familiar Groupon design with cheesy photos. No, that can’t be Groupon.

Who knows? IndoGroupon might turn out to be a good idea since Groupon hasn’t established itself in Indonesia. Logging on to groupon.co.id, leads you to Groupon Singapore instead. It’s a good idea only if IndoGroupon can be the market leader in Indonesia. The name does sound apt for Groupon but it would be an uphill battle fighting against other clones that had head start in the market. As long as Groupon holds the country domain suffix, it would be hard to “blackmail” the daily deal giant. Other prominent daily group deal site in Indonesia includes Disdus, Dealkeren and Lapar.

The story in China is different, though. The domain Groupon.cn is snapped up by a Chinese clone which forced Groupon to launch Groupon China through Gaopeng.com. The Groupon China site is now live but business has yet to start. Users, however, can log on to the site and register your interest for up to 70 percent discount.

Not only has Google played an important role, Groupon Japan has also started a donation campaign for the Japan quake victims. The effort has so far raised more than 27 million yen (US $330,000).

The money will be donated to the Red Cross Society to aid Japan in quake relief. Besides setting up the campaign on its site, Groupon will match the donations made by donors. For example, a $100 donation is equivalent to $200 in total.

In Japan

This morning, I was awaken by the vibration of my phone. It was an earthquake early warning system which meant that a big quake had occurred somewhere nearby and will probably hit our area soon. Fortunately, it was a false report for our area but other quakes had broken out in various parts in Japan.

In central Tokyo, a number of office workers spent the night either in their offices or evacuation spots because the lifts aren’t working. The media reported that more than 9,000 people stayed near Shinjuku Station. Officials reported that at least 350 people were dead and about 500 missing.

I hope rescue will arrive as soon as possible.

Tencent and Groupon China’s Gaopeng just went live, a Chinese friend of mine informed me. Although the site is now  live, there isn’t any deals available yet. Upon landing on the page, visitors are prompted to sign up for Gaopeng’s newsletter to receive further news. It seems like Tencent and Groupon have somehow reached an agreement in their previous dispute. In Groupon’s wish, Gaopeng is now live and Tencent has ample time (it seems) to work on localizing the group-buying service. We’ll update as we learn.

“This joint service signals the beginning of Mail.Ru Group’s enhanced collaboration with Groupon which is further expected to embrace Mail.ru Group’s other projects. Buying discount vouchers on the Internet is a growing trend and we continue to deliver value to our customers by getting involved in the newest global trends. Our cooperation with Groupon makes Odnoklassniki the first social network in the world to offer its members the full scope of the significant discounts that social commerce offers. Thus, our audience will have the ability to use their social graph more effectively,” Ilya Shirokov, VP of Mail.Ru Group and the Head of Odnoklassniki said in a statement.

Meanwhile, Elena Masolova, the co-founder of Groupon Russia (formerly DarBarry) said:

“We’re happy about this cooperation. We have been impressed with the success of Odnoklassniki and Mail.Ru Group. We very much appreciate that such a quality audience is vital for the further development of Groupon in the Russian-speaking Internet market. We make significant efforts to negotiate the most attractive discounts to our users and we’re confident that the Odnoklassniki users will appreciate the service and will like our exclusive offers.”

Groupon has been really aggressive in expanding its sales channel in Asia. Besides massive acquisitions in the region, I’m also seeing Groupon’s Google ads on multiple websites (probably targeting Asians since I’m an Asian).

This collaboration gives Groupon a chance to test water with social networks. Perhaps, positive results could persuade other social networks to join the collaboration. Facebook probably wouldn’t buy the idea. But other niche social networks like Renren of China, Zing Me of Vietnam or even Indonesian mobile social network, Korpol might see value in the collaboration.

Special thanks to Jasonmm for the heads up.

Groupon wants things to be done fast. In China, Groupon has so far hired over 1,000 employees within a few months and is looking to add even more. TechCrucnh reported that “the operation is pure chaos: Rapid hiring, little due diligence and money being thrown around. The biggest gripe: It’s almost entirely run by foreigners.”

The Groupon China website is also designed in western style while Tencent wants it in Chinese style. Clearly, Groupon’s moves aren’t catered for the Chinese market. I find it really hard to understand why Tencent isn’t the one handling Groupon’s localization strategy in China. Well, I guess Groupon’s arrogance makes them think they know it all. Although both Groupon and Tencent own equal share in the joint venture, it was reported that the Groupon German team makes most of the decisions.

Oliver Samwer, the person in charge of Groupon’s overseas expansion for the Germany team is in talks with Ouyang Yun, CEO of the joint venture on Tencent’s side. It was also reported that the joint venture might collapse if both fail to reach an agreement.

To the Groupon team: China isn’t like the West and it will not become like the West. So, don’t look at China through the Western lenses. Catch Martine Jacques’s TED’s presentation to understand China better.

[Via Global Times]

We heard rumors from several sites that Groupon China’s domain will be gaopeng.com. A domain whois check showed that Tencent, Groupon’s partner in China, was the company which registered for the domain. A Chinese blog, named Tech Web provided evidence to support its claim. Tech Web has a screenshot of a Weibo user and reporter, named Song Wei who said (translated), “In an interview with Groupon China yesterday, I learned that Groupon China will be named gaopeng (高朋). This is the final result between an American and Chinese Internet company.”

Acquire and rebrand: It wasn’t as straightforward as Groupon Hong Kong or Groupon Singapore. Groupon’s first challenge in China is to choose a suitable name.

The domain, Groupon.cn was taken up by another clone that has identical design as Groupon. Groupon.cn proves to be a tough nut to crack. Besides naming issues, Groupon.cn is a tough competitor which claimed to have over 7 million registered users and has so far helped its community save US$80 million. We last reported that Groupon China would be launching “very soon” and Groupon Hong Kong’s CEO is expected to play an active role in Gaopeng. No exact launch dates were provided.

The expansion is made possible through a joint venture with Tencent. Groupon has already hired about 120 employees in China and is looking to hire up to 1,000 employees in the next three months.

“We want to dominate the market in China,” said Yeung, who is going to play a role in Groupon China’s operations.

Personally, I can’t wait. It’s exciting time ahead to witness how Groupon will fare in China. One of its biggest success drivers would be Tencent, which has deep knowledge in the Chinese Internet market. On a fair note, Tencent would love to break into the e-commerce market through this Groupon partnership. It’s a win-win situation. Both companies understand that it is better to earn a slice of China’s e-commerce market than having nothing at all.

There will be resistance. Jack Ma, Chairman of Alibaba Group will fight to ensure Alibaba owns every piece of China’s e-commerce market. Last year, its group-buying site Ju Hua Suan, had more than 5 million users who bought from the site, which recorded $30 million in sales. The highest transaction recorded in a single day was about $4.6 million, which happened before Christmas on 21 December 2010.

Groupon.cn, which claims to be the largest group-buying site in China is also a strong competitor. The Groupon clone has so far recorded more than 7 million users and helped users save over $1 billion through its service.

E-commerce in China has grown rapidly and is a lucrative industry to be in. A recent report by iResearch stated that e-commerce now contributes 35.5 percent of China’s US$7 billion Internet economy. With Groupon China entering the market, it will intensify competition and improve overall services. The customers are the big winners.