China’s Group Buy Market Plummets to 12-Month Lows

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

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

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

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

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

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

[Source: Donews – article in Chinese]