Group Buy Market Transformation: From the public game to the oligopoly

Three years later, the first round of the group buying market, characterized by a chaotic war, ended in a new phase characterized by oligopoly competition. Group buying has not been a popular game for anyone who can hand, but has become a new hand with only a handful of oligarchs involved.

Copy Groupon

April 2011, a new group buying website was born in Beijing. The new member, who is called high friends, immediately aroused widespread concern in the industry.

At that time, group buying site has been developed in the country for more than a year, various group buying sites have sprung up. The difference is that it has Groupon's "pure genes" and is seen as Groupon's official entry into China.

As the founder of group buying, Groupon has been successful in the European and American markets, and China has become the most important place in the Asian market to be cultivated. and the choice of cooperation with Tencent, set up a new group buying company, become its main way to enter China.

According to the plan, high-group purchase by Groupon and Tencent each contributed 50 million dollars, and by the rich experience of Groupon International team to operate.

High-peer copies of Groupon are almost all-encompassing. In terms of talent, from Groupon to have a rich experience in buying 300 "foreigners" to participate in management. At the same time, high friends to pay jobs, attracted a large number of talents to join. According to senior vice President Gaoxiapinghu introduced, high peer team at that time pay higher than other group buying enterprises more than 50%.

In addition, Gao Peng also adopted an international ERP enterprise products, the enterprise's ERP products used in many of the world's top 500 enterprises, excellent products but expensive. Each employee of the high friend needs to pay 25 dollars per month for the business.

In addition to being a luxurious resource allocation, Groupon's advertising model abroad has been moved in. According to this model, the group buying merchants to buy as a kind of advertising and attract passenger flow method, the merchant needs to pay for high friends 50% of the transaction as a reward.

High-return business models, high-paying talent strategies, luxurious ERP management systems, and market promotions and rapid urban sprawl have made Groupon invincible in Europe and the United States in a way that has hit Waterloo in China.

When a high friend raises a commission for a merchant to pay a near-half turnover, domestic group buying companies generally only 7% to 10%, which makes high friends lost the competitive advantage in the beginning, plus hundreds of thousands of yuan per month of ERP use fee (high friends at that time there are 1800 people), as well as high staff wages and advertising marketing costs, This makes the high friend quickly loses the advantage in the competition.

"Many of the things that high friends do in the early stages are not wrong, but they are not suitable for China's national conditions; "Gao Xia summed up, Groupon model in the Chinese market can not fall, the most important thing is that the Chinese group buying market competition is too intense, only a few foreign group purchase enterprises, and domestic more than a year have thousands of group buying enterprises appear."

From April 2012 to October, after a series of turmoil, such as selling false waves and high level adjustment, Gao Peng began to seek new life. Tencent in the investor-led, QQ group Buy, Group F, Gao Peng Triad for one, set up a new high friend.

With the birth of new highs, a lot of radical practices have been discarded – adjusting the merchant's return to 10% of the transaction amount; Select the new ERP system developed by Tencent, and compress half of the 3000 people in three groups, while the original hundreds of foreigners returned home from the new management team with a better understanding of the Chinese market.

Adopting a group buying model and a more rational development strategy in line with China's national conditions, and with lower operating costs, new high friends began to explore a suitable development path for China's market.

"The adjustment to the past six months, the high peer performance growth curve, proved that our integration is correct, which has been recognized by shareholders." Said Gao Xia. In his view, today's new high friends are becoming more rational, know how to retreat.

Usher in an oligopoly era

Gao Peng is only a microcosm of the development of Chinese group buying industry, its experience of crazy expansion, turbulence adjustment, and finally return to rationality, but also coincide with the development track of China group buying industry. In fact, "madness, Fear, rationality" is also the domestic group buying industry in the past three years the true portrayal of the development stage.

Since 2010 full network announced the opening of group buying business, the Chinese group buying industry has entered the blowout-type development period. The fast-growing trend continued into late 2011, when the number of Chinese group-buying sites reached more than 5,000 peaks.

During this period, the major group buying enterprises carpet advertising bombing, as well as the continuous spread of urban expansion, personnel job-hopping and other information flooded the entire industry.

"Whether it is the capital market, or entrepreneurs are like the discovery of Jinshan, group buying is considered to be in the 020 concept may be the first to become the commercial form, the entire industry is showing an irrational state of excitement, the major group buying sites are crazy to throw money, blind expansion." One industry insider said.

The madness of the situation came to an inflection point in August 2011. Hu Chen, founder of the group 800, remembers the changes very clearly so far. "The most obvious feeling is that some small group buying site suddenly stop operating, no product updates, become a zombie website can not be run." "Hu Chen said.

According to the Regiment 800 statistics data show, as of September 2011, North wide and other first-tier cities have appeared large-scale group buying "zombie website", about 150, of which, Beijing 116, Guangzhou 22.

Zombie site, opened the group buying industry "fever" prologue. After that, all sorts of bad news about group buying began to debut. January 2012, the Regiment treasure network was burst capital chain nervous, and in May announced bankruptcy; June, pull the net to revoke the ipo;10 month, 24 coupon net announced the business.

In group buying big company problems frequently, at the same time, a large number of small and medium-sized group purchase sites have left the field. Hu Chen, only from September 2011 to the end of 2012, the number of group purchase sites from more than 5,000 plummeted to more than 2000.

"If the group buying industry in 2011 is a crazy stage of development, then, after this, the group buying industry suddenly entered a time to let everyone feel fear." Wang Huiwen, vice president of the United States network.

The reason for this, although the industry benchmark Groupon successfully listed, but after the listing, the stock price quickly into the fall channel, which directly led to the capital market for group buying mode of enthusiasm. The resulting chain reaction is that domestic investors suddenly stopped the group buying industry financing, so that group buying industry into a tight cash chain dilemma, and thus accelerated more group buying enterprises off the field.

From 2012 onwards, most of the domestic group buying sites have not been new financing. As a need for high capital flow of the industry, the funds of the "Duanliang" so many group buying enterprises struggling. In the fear of the group buying industry, the tone of the industry has shifted from seeking expansion to "survival".

At the same time, the Matthew effect is becoming more prominent. Regiment 800 of the data show that 2011, 2012, the top five market share is 55.8% and 74.5% respectively, and 2013 years ago two months of data show that the top five (American group, reviews, handles, litters, glutinous rice) market share has reached 88%.

Data highlights the fact that after three years of development, group buying has been a battle between thousands of hundred groups, transformed into a few big guys can participate in the game, group buying has entered a new stage of oligarch competition.