Where is the root cause of China's buyout business?

CICC recently published a "Depth Research Report on E-commerce Industry," which reported that the number of Chinese buy-in enterprises is large and the problem of homogeneity is serious:

Group buy is a combination of e-commerce B2C and SNS platform for the emerging online sales model, that is, with the power of the Internet will know and do not know the consumers together to enhance the bargaining power with the merchants, so as to obtain a large degree of product profit sharing. And the traditional C2C, B2C e-commerce is different from the group buy is to some extent C2B (Consumer to Business) business model, that is, buy site are determined in advance the number of target customers to conduct group trading. Therefore, for consumers, buy is an online shopping, access to affordable products and services; for businesses, buy is an effective marketing tool.

The main profit model buy commission income, spread income and other income, China's buy site to commission income and postal income based.

► commission income: that buy site as an intermediary platform, according to the amount of buy deal, according to a certain percentage of commission. The current domestic buy site commissions range from 10% -20%, lower than the United States 30% -50%.

► Difference income: that is, buy site as a middleman to earn the purchase price (the price when the user buys the product) and the settlement price (communicate with the buy activity, the price that the buy net war and the merchant agree on is not higher than the purchase price of the commodity) Difference.

► Other Revenue: Revenue generated from the buy site itself, including the advertising revenue of the site, the transaction amount of the group purchase without actual consumption, and the like.

Thousands regiment battle, serious homogeneity

Affected by the explosive growth of US buy-ins, from the beginning of 2010, the number of domestic buy-to-buy websites in China sprung up rapidly, increasing from the single digits of the beginning of the year to nearly 1,000 websites, providing localized consumer services and consuming groups Concentrated in first-tier cities, with Beijing and Shanghai accounting for more than half of the share. Since the second quarter of 2010, the buy site began to be sought after venture capital, investment and financing activities have become increasingly active.

► China's buy market is under cultivation and its future market is bright. And the United States compared to the group buying industry, China's Internet users buy for the low awareness and trust. According to CNNIC, as of the end of 2010, the proportion of online shopping users using group buying service was 12%. However, more than 80% of the online shopping users who did not use the group tend to try the group buying service in the future. At the macro level, the group-buying model known as "high discount rate" is gradually becoming the first choice of consumers in soaring prices.

►Commerce website led the rapid development of life service e-commerce, but the phenomenon of homogeneity is serious. According to buy navigation website Letvo statistics, China's buy site service products accounted for 53%, in-kind products accounted for only 34% of service products due to regional service-oriented products. Due to the current low awareness in the business, the buy site has the same page settings, the same business was repeatedly consumption and so on.

Lack of standardized management, the industry faces the crisis of trust in consumers, shuffling or inevitable. Due to the low barriers to entry, resulting in the rapid growth of buy site serious industrial site there mixed situation. Since the end of last year, there have been an endless stream of negative news about the purchase of websites and the healthy growth of the industry under the normalization of supervision has become imminent. If 2010 is the first year of group buy, 2011 is likely to buy site "Ebb Tide, the survival of the fittest" year. In the initial stage of the establishment of the website, the huge investment in burnt-out enclosure has led to the closure of many small and medium-sized websites. In addition, the consumer behavior of consumers tends to be more rational and the formation of a supervisory system. The large-scale high-quality enterprises in the industry will pull together with their competitors Big distance.

The six camps are leading the way

Our buy site basically formed six camps: independent buy camp; portal camp; SNS community camp; vertical market camp; traditional e-commerce camp and vertical media camp. In the current high capital circulation industry, we believe that similar to the traditional e-commerce, buy sites still follow the principle of customer wins, product innovation and quality service principles.

► Independent buy site has a first-mover advantage and a strong offline execution, and the formation of independent brands and scale advantages of the buy site, on behalf of the business is the handle, the United States delegation, filled the network. Its core advantage is the ability to expand offline, product design capabilities.

► Traditional e-commerce sites rely on the buy site: on behalf of - Taobao together cost-effective. 1) Such websites are mainly physical transactions, which can provide group purchase users with physical goods other than service products, and even differentiate and innovate multi-groups daily; 2) a complete industrial chain including platform services , Capital, logistics, warehousing and mobile services for the group purchase business play a synergistic role; 3) can use the website has accumulated business scale, user resources and brand effect, more service and quality assurance; 4) buy can also become B2C website marketing tool.

Community buy site: Representative - glutinous rice group. 1) has a formed user base, and the targeted user positioning more clearly; 2) from the platform to the community-based transformation can not only help group buy site to rapidly increase the number and viscosity of users; 3) community marketing is the most inexpensive and effective Way, glutinous rice dumpling got very impressive turnover at the beginning of last July.

► Has a strong offline business development team and a wealth of regional characteristics of business resources: representatives - the public comment. Independent large-scale buy site at this stage are facing the homogenization of products and services tend to be the problem, so offline business development team has played a decisive role. In the early days of its establishment, group buying websites usually targeted at acquiring users (just as the overwhelming group buying advertisements, networks, CCTV, metro, and ping-pong went outdoors), but long-term development must depend on the quality of service and product differentiation. City information sites, such as rice network, public comment network, these manufacturers have accumulated a large number of subdivision industry classification information, and through the traditional business with high-quality business resources, is very conducive to business promotion and user precipitation.

Vertical segment of the Group buy site: on behalf of - excellent network (white-collar fashion network). Vertical group buy website is bound to be the star of the future, integrated group buy website gradually shift to vertical, so that a more detailed business model more clearly. Online and vertical websites can launch group buying products more accurately according to specific user groups and interact with users specifically. Vertical websites can also be used to develop business based on targeted customer groups and optimize resources allocation. Vertical group buy site precision and niche more help build the brand of the platform, thereby enhancing user stickiness and awareness.

Groupon case analysis

By the end of 2008, the founder of group buy site Groupon was founded in the United States, with its simple mode of operation and a clear profit model has made explosive growth, growing even faster than Twitter and Facebook, the market value of the rapid break 1 billion US dollars. Groupon buy the main features of the site are: products are mostly local life service products; website revenue mainly from the transaction commission (30% -50%); daily only provide a group buy products; limit shot once a day, participate in group purchase users To a certain number that open the transaction; a huge offline business development team and community marketing. By studying the success stories of Groupon, we summed up the three core competitiveness of the Group buy site:

► Localized operations and strong offline business development teams: Groupon offline sales teams scale far beyond online teams and Groupon needs to deploy a large number of salespeople in each of the covered cities to negotiate with local businesses. The strong regional nature is the biggest difference between the operation of buy site and the traditional e-commerce website. Relying on the local offline business development team, it is more conducive to expanding the resources of local businesses, forming consumer clusters and enhancing bargaining power. Low price and high discount rate is to improve the activities of the group buy the core of the site.

► Product main local service: Groupon buy products mostly restaurants, hotels, beauty, fitness, SPA and other service-oriented products. Compared with the physical products, the marginal cost of service products and logistics costs lower bargaining space is relatively high. And service-class products without the need for businesses to consider inventory and other factors, so in the group purchase model than the physical products have a high supply capacity.

► Social Marketing Channels to Cover Mobile Terminals: An online community platform is an accelerator for group buying and development. Groupon has been through Twitter, Facebook and RSS, email subscription and other ways to inform and connect users, with the SNS platform for publicity effect of efficient word-of-mouth marketing, increase network influence and user stickiness. Timeliness is a major feature of group buying, Groupon LBS and buy through the acquisition business integration, and the combination of mobile Internet allows users to use debris time to complete the transaction anytime, anywhere.