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

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

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

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

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

See more statistics from Dataotuan on their blog.

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

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

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

Here’s the new report in its entirety:

[Source: Dataotuan]

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

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

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

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

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

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

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

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

[Source: Dataotuan blog]

There were lots of interesting happenings in China over the past seven days, as Sina rolled out a new microblog feature, Alibaba finally privatized, and Tencent dropped some epic bling. Read on to find out more about what went down in China tech news this week.

1. Welcome to the VIP Room: Sina Weibo Begins Charging Premium Users

Early in the week we saw China’s Sina Weibo microblog roll out a subscription service that charges users for extra features. The VIP services cost a flat fee of 10 RMB (or about $1.57) per month and entitles you to things like personalized pages, voice posts, better security, and extra mobile features. Oh, and your profile will get a pretty golden crown icon.

2. See $55 Chinese Android Tablet Assembled on Factory Line [Video]

Here’s an interesting inside look at the production of a low-cost Android tablet, China’s Boxchip A13. With all the controversy surrounding factory conditions in the country, this behind-the-scenes clip gives a glimpse at the young faces working to put together electronics in China.

3. No Deal! Lashou Withdraws Its US IPO Filing

Chinese daily deals site Lashou had hoped to raise around $80 million by going public on the NASDAQ, but this past week saw the company request to withdraw its IPO filing. Bummer…

4. Alibaba.com Now Officially a Private Company

This move was long expected but it became official this week, with Alibaba issuing a quiet blog post to mark the occasion. According to Alibaba Group founder and chairman, Jack Ma, “privatization is not the end but rather a new beginning.”

5. Tencent Takes Stake in Epic Games, Makers of Unreal Engine

It was announced this week that Epic Games, the makers of Gears of War as well as everyone’s favorite iOS game Infinity Blade, received investment from Chinese internet giant Tencent, taking an undisclosed minority stake.

6. QQ and UC Are Leaders in China’s Mobile Browser Race

According to new figures from Analysys International, the mobile browser war in China is currently dominated by Mobile QQ Browser with 40 percent of the market and the upstart UC Browser, close behind with 38 percent.

That’s all for this week, folks! For our full spread of China coverage, you can click here or subscribe to our China RSS feed.

Ooops!

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

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

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

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

The figures for March show that Meituan has further solidified its top position, moving up to hold 17 percent of the market from the 15 percent it held the month before (see interactive chart below, Meituan in blue). 55tuan, Dianping [1], and Lashou remain just behind as the other big players. You can see the entire market breakdown in the chart below.

Dataotuan notes for the first quarter of 2012, the total revenue in the daily deal market was about 4.5 billion RMB, with the top 20 websites accounting for 95.4 percent of that total. The four leading players now account for a sizable share of this revenue, and I encourage you to check out Dataotuan’s full report for even more information on how this drama is playing out.

According to reports from Dataotuan.com, a group buy aggregator and analyst, as of February the market leader is Meituan holding 15 percent of the market. It’s followed by the trio of 55tuan (11.8 percent), Dianping (10.7 percent), and Lashou (10 percent). The rest of the crowded field is packed together around or under six percent. Dataotuan points out:

The top 4 now makes up more than 47.5% of the total deal revenue. To put that in perspective, the top 10 represents 78% of the deal revenue. The change is here more in market consolidation.

Indeed we have seen many of these companies go through troubles of late, with Renren’s Nuomi losing $9.6 million in the last quarter, and the strange drama around Tuanbao of late has been sort of a tragic comedy with a twist of Charlie Brown.

You can check out the chart below (image version here) where we have plotted Dataotuan’s figures [1] for the past six months (with the exception of those with all but negligible share) to get a bit of a broader picture of things. Their February report, in its entirety, can be read here.

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

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

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

[Source: DaTaoTuan’s blog]

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

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

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

Market Share in January

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

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

Number of Deals Actually Sold

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

Movie Tickets in Demand

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

Shopping Deals

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

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

[Source: Dataotuan’s blog]

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

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

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

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

2011 Daily Deals Sector in Summary

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

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

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

[Source: Dataotuan]

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

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

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

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

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

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

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

[Source: Goodlife.tw - article in Chinese]

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

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

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

Daily Deals Market Share

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

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

Revenue and Deals Sold

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

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

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

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

[Source: DaTaoTuan’s blog]

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

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

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

Lashou Mall vs Taobao Mall?

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

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

[Source: QQ Tech news - article in Chinese]

It seems like just yesterday that Lashou was all ready to go IPO on the NASDAQ as LASO. But now, in the middle of its road show, a rumor is spreading that its IPO is cancelled.

Tu Hongchuan, a Chinese venture capital CEO, seems to have started the rumors by posting this message to his Sina Weibo account this morning:

Is Lashou canceling its IPO? Wall Street investors are saying “Lashou is not going to IPO.” I hope this is not true, Lashou’s angel investor is a buddy of mine. Go!

It would be a truly bizarre time to cancel, given that their scheduled IPO is right around the corner, but adding fuel to the fire is that as yet, the media hasn’t been able to get a response from Lashou’s CEO Wu Bo, and Zhu Xiaohu of GSR Ventures, a major Lashou investor, said it was inconvenient to comment at this time.

We spoke with a source familiar with Lashou’s corporate leadership, who could not confirm the rumors, but told us:

I was talking to some investment bankers just the week before and it seemed like things were on pace, so something must’ve happened. [It] may be regulatory-related.

The source, who told us they had enjoyed working with Lashou and praised its CEO Wu Bo, also added:

The company claims that Lashou’s China operations was breaking even towards the later half of the year, led by strong performance in Guangdong area. But this does not take into account the massive amount they poured into marketing. It’s not necessarily Lashou as a company, but the whole group-buy industry in China.

Lashou’s road to IPO has not been entirely without bumps. Last month there were rumors about possible upcoming layoffs for the company. Also, Lashou executives have pledged to buy their own shares at the IPO, which is definitely unusual.

What’s going on behind closed doors? We have no idea. It should be clear fairly soon whether or not Lashou plans to IPO, but if it doesn’t, there’s got to be a pretty significant reason that would cause it to cancel this late in the game.

Lashou, one of China’s largest group-buy sites, is now on the verge of its US IPO, having filed with American regulators. The Beijing-based company, which started-up in 2009, will hit NASDAQ stickers soon with the symbol LASO.

Nearly 5.4 million American Depositary Shares (ADS) will be issued at a price range of US$13 to $15. That could raise Lashou as much as $80 million. At its median stock price, the site would be valued at $358 million. The IPO is being underwritten by Barclays Capital, Jefferies, and CICC HK Securities. Check out the SEC filing here

Lashou will reportedly use some of the money raised to build a call centre for customer support – the kind of huge outlay that no other firm in this cash-strapped sector can afford. There are rumors circulating in the industry that Lashou might actually be bracing to pivot into a more conventional B2C e-commerce site, along the lines of 360Buy or Dangdang (NYSE:DANG). Doing so would put it into a sector with higher profit margins than the daily deals market; but, with the company being in a pre-IPO quiet period, it’s impossible to elicit any information on this.

Groupon (NASDAQ:GRPN), which operates in China as Gaopeng, became the first group-buy site to IPO when it did so last week. Lashou will be the first Chinese one to list.

Interestingly, Lashou will be the first major Chinese IPO overseas since the new VIE regulations were revealed (which is a proxy ownership structure needed by foreign investors in Chinese companies). It might cause unease around the world, with investors unsure how the new VIE rules safeguard what shareholders own.

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

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

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

Group Buy User Facts and Stats for 2011

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

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

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

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

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

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

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

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

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

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

[Source: DoNews - article in Chinese]

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

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

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

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

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

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

[Source: Techweb - article in Chinese]

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

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

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

China’s Group Buy Top 20

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

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

Top Deals

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

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

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

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

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]

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]

The CEO of Focus Media, China’s biggest outdoor digital media agency, has revealed that the country’s multitude of booming group buy sites now account for US$10 million (64.3 million RMB) of quarterly revenue at his company alone.

Focus Media’s CEO, Jason Jiang (pictured below), today claimed first quarter revenues for his firm of $136.1 million. The spending from group buy sites now represents eight percent of Focus’ revenues. Jason says that’s up from zero percent last year; and will likely grow to 10 percent when he eventually reveals Q2 earnings.

Focus Media CEO, Jason Jiang.

Ad spending among the dozens of leading group buy sites in China – only one or two of whom have a market share that’s in double digits – is turning into a surely unsustainable arms race. It is reported that some of the key players in this sector – such as Meituan, Lashou, and Nuomi – spend anywhere from 10 to 20 million RMB per month on ads.

This trend of increasing e-commerce spending goes beyond group buy sites and is occurring among smaller B2C sites as well, says Jason. Redbaby, a specialist site for children’s clothing and general goods, is reported to be one of the biggest ad spenders in that sector.

The ads often take the forms of repeated segments on LCD screens in subway trains and in supermarkets and office lobbies, or static ads plastered on billboards and all over buses (as pictured above).

Just last week we looked at market share among group shopping sites in mainland China, and found that Tencent’s QQ Tuan and Meituan were emerging as the two strongest competitors thus far.

[News source: Techweb - article in Chinese; Lead image source: China-screen-news.com]

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]

China’s biggest search engine, Baidu, is today rolling out its own third-party login service, Baidu Connect, wrapped around its open API platform.

It will allow people to sign into numerous third party sites using their Baidu account credentials. Already today Sohu, Yesky, group buying site Lashou, and Baidu’s own Qiyi have all added the Baidu Connect option. More third-party sites will follow in due course.

A number of China’s major web platforms already have a similar API and Connect-like service, following the lead of Facebook. Tencent was one of the first in China to do so, with its ‘OpenSNS’ framework, while Kaixin, Renren, Alibaba’s Alipay, and Sina Weibo all have their own.

This is evidenced by the sheer number of colourful little badges on, for example, Lashou.com’s login page – now nine in total – which each represent a different login option for users, to save them the hassle of registering a new ID with that site. When you click the Baidu Connect badge, you’re taken to their new connecting page, as pictured above.

You can check out Baidu’s Open Developer Platform here, where you can take a look at other projects that third-party developers and sites can utilize, such as Baidu Maps and their input-method editor for Chinese text input.

We have reached out to Charm Communications, who was just announced last week as Lashou’s PR firm, but a representative told us that regarding this particular matter “it would be best to contact Lashou directly.” We’ll keep trying.

Earlier this year it was reported that retailers Carrefour and Wal-Mart were fined in China for price fraud, after inspections found that they were involved in ‘overpricing and overcharging consumers.’

China’s group buy scene is an increasingly crowded one, but Lashou has been holding steady at near the top just behind market leader Taobao’s Ju Hua Suan, which is pretty good given the stiff competition.

[Data from iResearch]

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.

The service is fairly easy to navigate, allowing users to drill down to group buying deals according to city, price, and category of goods. Tuanyouhui also features a handy deals map, although this feature is still a little sparsely populated particularly in second and third tier cities.

Tuanyouhui is still using the domain tuan.sdo.com, which remains prominently featured it the website’s logo. But visiting tuanyouhui.com will work, as that domain is registered to Shanda.

Given the amount of services springing up around China and the rest of Asia, it makes sense to package them all up like this as Shanda has. The website reminds us of Japan’s AllCoupon.jp, an effort from Cybridge which conveniently aggregates online coupon deals from the country’s major coupon sites.

Via Marbridge