The capital herding effect is one of the important reasons to make the industry tragedy evolve to such a tragic extent

recently, many large group purchase sites , there have been large-scale layoffs, large areas of arrears of business loans, large-scale reduction of regional sites, a large number of paid users are merchants refused to serve the phenomenon. In this regard, Qian Yuanpeng, vice president of the network, said that the capital herding effect is one of the important reasons to make the industry tragedy evolve to such a tragic extent.

Yuanpeng, it is clear that the 2011 China group buying industry, is the capital of the herd effect is very bright year. Similar things happen in many companies: the capital-urging team quickly burns the money and concentrates the CEO's KPI (key performance indicators) on sales. The "sales" in this industry include more than 95% "collections" that need to be paid off immediately next month. This sharp fact is obscured by the incredible monthly growth model. And it's spreading fast.

Why in the United States has become a business model of "buy", in the domestic almost halberd? One reason that cannot be overlooked, Yuanpeng, is the resurgence of herding capital.

The so-called herding effect is that people are often affected by the majority, and follow the masses of thought or behavior, also known as the "herd effect."

Yuanpeng that in the group buying industry, a widely believed theorem is: As long as the market share first, all the people killed, you can return to pricing power. And it is this that guides a series of companies to start fast, rapid expansion. Under the guidance of this theorem, in the last 20 months, the industry has burned tons of dollars at incredible speed. and the current group buying industry, margin level quickly and steadily reduced to intolerable.