Online Business…what's new!
Groupon finally made its entry into the world’s most densely inhabited internet market as its Chinese site Gaopeng.com has begun offering daily deals in March.
Their emergence into the market has ignited the curiosity of some Chinese industry leaders, however the big question remains how they plan to distinguish themselves from already established firms. The online group-buying boom in China started in early 2010 and by the end of the year, there were over two and a half thousand groups involved.
And industry experts in China believe that first and foremost, changes will have to make to the margin the company can expect from operating in China. They will not be able to enjoy a 50% gains on each coupon often seen in the US market and should expect to see a more likely figure of 10% or lower.
Already, Groupon’s daily deals offer in Shanghai and Bejing have prompted China’s largest group-buying site Lashou.com to embark on an expansion into China’s smaller cities. Whilst at the same time, negative commentary from Chinese heads of business and media warn that western internet companies do not have a good success rate in China. Fraud is rife and the business environment is frenzied, this coupled with the cultural and consumer differences will prove to be a huge test for Groupon. As George Song, former head of Google China explained: “In the US, people are used to making a reservation in a restaurant, but Chinese rarely ever do that,”
All warnings appear to be being observed though as Groupon team up with Tencent Inc, China’s largest internet portal, as advisor, and unpertubed by the challenges that lay ahead, Gao Peng VP said the company intends to introduce a clever group-buying business model along with an international service standard to the market.