Groupon coming to China

Lets look at some facts about this business …

Twitter took 3 years to hit a USD$ 1 billion valuation, Facebook with 2 years and Groupon broke the record with a year and a half. Groupon was the craziest Internet companies in history and its simply because it has a damn good business model where revenues come in from almost day one.

There are many Groupon copycats in China. Market resource said there were already over 100 but I think the number exceeds 500 personally. The market is already overheated and going much crazy than anyone had expected, I have staff that do “grouponing” ( tuan gou ) daily looking for good offers and asking everyone at the office to buy along. Even my expat partner is doing the “tuan gou” looking for top spa to take his girlfriend every month. Some have raised a large amount of money from VC and is preparing to forge ahead into every big city in China. The Chinese market is big enough for “tuan gou” style of business given the many cities each company would need to cover so there are many opportunities available especially when the business model is basically about:

1.) Cheap price
2.) Best and variety of offers
3.) Ability to ensure that vendors honors the package

However we cant say that “Grouping” is a copycat business model from the West like YouTube and Twitter as “Group Purchase” ( Tuan Gou ) is hugely popular in China especially in Home improvement/Home decoration market where thousands of people got connected online and buy the same products together in street shops in order to get a good bulk-discount. TG.com.cn is reaping as much as RMB 50 million after-tax income and is already getting ready for IPO next year.

Groupon style represents a new method of the old method in the “tuan gou” system.
There is a news on Donews - http://www.donews.com/original/201010/236202.shtm ( Chinese ) which state that Groupon’s business development director have held several meetings with five popular Chinese Groupon clones, Meituan, FTuan, Lashou, Aibang and QQTuan. The news says Groupon met these clones one by one and the detail of each meeting can not be disclosed due to an NDA signed by each party.

An insider said Groupon’s visit to China this time had two purposes, firstly to understand the local market and local regulation; secondly to look for the right local partner. Groupon will likely follow the same strategy when it entered Japanese market - acquire one local clone.

Which one will be the super lucky clone to be acquired by Groupon?

However if Groupon decides to kick start the business themselves in China and send in a group of Western professionals that will almost equals to digging their grave here in China.

*NOTE : Love this business and was infact looking at it since Groupon started but did not proceed as I still believe in being professional and an expert in a field I'm more familiar with. However I had a friend whom just keeps starting what-so-ever that is hot in the US in China by just mimicking exactly the business concepts. He did pretty well too so far !

eCommerce is huge in China

DangDang the largest Chinese online book retailer, will be going public in Nasdaq. As one of the first major Chinese ecommerce sites going public, it will create a lot of noise especially today when China “ecom” business is booming.

It’s rumor that Dangdang will have a valuation of about US$ 1 billion base on about only US$ 5 million in profit last year, it provides a PE of 200 times. Growth of the company’s core business ( selling books ) is slowing down. DangDang have a new business line - which sells everything from electronics to linens, slipper, home decor, milk powder, etc … This new line grows fast with over 230% last year tho’ currently only account for a small portion of the company revenues.
The brand name DangDang is famed for books in China as with its main rival JOYO ( Amazon’s China Subsidiary ).

Apart from Taobao which we could say resembles a huge shopping mall online whom have everything from A-Z from thousands of sellers the ecommerce industry is moving “vertical” specifically targeting a specific segment or niche’. Such companies in China - for electronics, 360Buy, for milk powder and other baby products Red Baby tho’ a host of many others baby sites are mushrooming including a friend of mine whom had just paid a hefty 1 million for the domain Baby.com.cn to launch his ecommerce baby line after acquiring more than 100+ baby stores across China. And for garments products there is Vancl whom I had to mention since their advertisements had been popping up on my screen daily every time I start my MSN. And there is Moonbasa and Rutisher too for clothing whom is VC backed today and is doing extremely good. Not forgetting Gilt.com Chinese version – VipShop and VipShangpin is fast shaping its business in China.

360Buy IPO is also in the pipeline and the company business is growing leaps and bounce so we be expecting another huge ecommerce IPO soon around the corner.

According to industry insider online book stores has gross profit margin of about 5-10%. Electronics : 3-5%. Garments : 20-50%. But eventually as predicted every ecommerce site that goes IPO will be opening up to sell almost everything to tap onto more categories to expand their market share and to increase revenues.

*NOTE : Had always wanted to be in this business but never had the chance or opportunity. Who knows maybe one day I will.

Facebook controls who you connect with ...

Not many of us may know ...

You might think that you have shared all your photos of your trip to Hangzhou, posted your "What's on your mind ?" and shared your videos with all your friends on Facebook but you are wrong as not all your friends gets to see your news feeds and updates. Facebook decides who gets to see it and who don't !!!

Facebook also keeps the details of its logics discreet and a secret.

Facebook practically decides what;s important for you in their very own framework. So in order to get more connected it is not about just posting news feeds and updates but take sometime off to visit the Facebook pages of friends you want your news feed to appear. This is one way to get into the system but may not be the best way to break the logic.

This is bad news to "Marketers" whom actually thinks they now have thousands of fans and their news feed is reaching and connecting with each individual one of them.

So next time you think you are in control ... think again !