Alibaba has today announced that its group buy site, Taobao Ju Hua Suan – meaning Taobao group bargains – is going to be spun off as a separate company. It has its own daily deals – which come from vendors as diverse as restaurants and travel agencies – and also serves as an open platform for other sites to sell their deals.
The site, at ju.taobao.com, opened in March 2010 and leveraged on the already huge Taobao user-base to get a head-start on the huge assortment of Groupon clones that popped up throughout last year. Its biggest rival by name is Tencent’s (HKG:0700) QQ Tuan; in terms of actual traffic and deals sold, its closest competitor seems to be Lashou, the much smaller start-up which is looking for a chance to IPO in the US next year.
Why make Ju Hua Suan an independent company within the Alibaba Group right now? An Alibaba spokeswoman explained to us:
We believe this will allow the platform to focus on its core competency and better serve its customers. Going forward, Ju Hua Suan’s strategy will revolve around providing an open, low-cost and efficient platform for the group shopping industry, details will be announced in the coming weeks.
Sounds like there’s something cooking there. It also indicates the site has matured enough to stand on its own.
Yesterday we looked at a new report which shows that 42.2 million of Chinese 500 million netizens used group buy sites in the past six months. Despite all that enthusiasm for bargains, a number of the indie sites are hurting – or simply over-hired in the early stages – and have been cutting staff in recent months. But the deals portals of China’s two web giants, Tencent and Alibaba, seem to have been immune.
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