In case you needed any more evidence that the group buying services in China are having a tough time in the highly fragmented, competitive marketplace, look no further than Renren’s Q2 financials. While the company itself posted a small profit, the same couldn’t be said for its group buy site Nuomi.com, which reported Q2 losses of $4.5 million US.
According to Renren’s report, Nuomi took in just over $1 million US during Q2, but its operating expenses for that same time period well exceeded $5 million, resulting in a substantial net loss.
Since Renren itself only managed to eke out a $0.8 million profit this quarter, and expectations of below average performance in Q3 have sent its stock tumbling, one wonders how long it can continue to support highly unprofitable Nuomi.
Nuomi was launched on June 23, 2010 but has been struggling in China’s crowded group buying market, where a huge number of sites are still vying for prominence.
Even Groupon, the American company that popularized the group buying format internationally, has faced significant setbacks in their Chinese group buy joint-venture with Tencent, Gaopeng.com; last month they made staff cutbacks and there are rumors flowing that the site is short on cashflow.
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