The troubled Chinese daily deals site 24Quan.com has announced that it is suspending its business for a few weeks – and that it “hopes to resume” in a few weeks’ time. We’ve reported on turmoil at the company as far back as November of last year when we heard the site was withholding wages and closing sales offices.
The 24Quan site is now offline, replaced with a statement that says, in both Chinese and (for some reason) English:
Due to misalignment of interest and ideology differences between previous shareholders and management team of 24Quan, as producer of 24Quan’s service, and taking into account of the interests of all those whom we loved and cared, our website will enter into a period of “temporary excursion”. As a result, regrettably we will not be able to offer your service in the upcoming few weeks. We hope to resume our service after we resolve our matters with our shareholders.
The site then offers a customer service telephone hotline. The wording of the statement doesn’t mention financial difficulties directly, but it’s likely that cashflow issues – or even crippling debt – are at the heart of the apparent tension between the unnamed “previous shareholders” and the deal site’s management.
Things once looked rosy for 24Quan. In market share stats for October 2011, it rose to become China’s fifth-biggest daily deals site, with six percent of the industry’s revenue for that month. But, in this fierce sector characterized by tiny profit margins and huge marketing spending, it’s likely that 24Quan was burning through cash – or piling up debts – in order to grab share in the market. But by the time of figures (from the same source) for 2012 Q2, 24Quan had crashed to 19th place with a meagre 0.6 percent market share.
In late November, 24Quan CEO Du Yinan responded to our afore-mentioned article about layoffs and debt, and told my colleague that he was, even back then, struggling to make “transformative changes” to the site. It’s not clear what those were, since it continued to plough on as a fairly conventional deals site long after the first reports of its business being in turmoil. He said the site was seeing “in excess of [US]$12,000,000 of cash turnover – every month” at that time.
Groupon-clone deals sites have been pulverized in huge numbers, like so many mosquitoes in the night, in the past couple of years. Indeed, in just the first six months of this year, 2,859 such sites have closed. Perhaps 24Quan can be added to that deadpool, if it doesn’t reappear online as promised within a few weeks.