Well it’s nearly the end of 2011 and this year has been a tumultuous year for group buying in China to say the least. This year, the number of group-buying sites reached a ridiculous 6,000+ sites but by the second half of this year, 1,800+ sites evaporated due to intense competition and low margins.
Gaopeng (Groupon China) has had a bumpy ride. First expanding at hyper speed and wildly hiring people and opening offices, burning through its treasure chest of venture capital and then eventually closed offices and laid off thousands of employees. They have even been accused of selling counterfeit watches, which damaged their credibility.
The general consensus this year was that group-buying market was over-heated and would just take time to stabilize. E-commerce experts believed the market would only sustain the top 3-5 players and the rest would either die or get eaten up through consolidation. The other path to avoid being stuck in a valley of competition was to take the vertical route and specialize in a product category like cosmetics.
According to the latest report released by group-buying aggregator and analytics tool, Dataotuan.com, Meituan will end the year on top in terms of revenue and total number of deals sold. It was also number 1 back in October with sales over USD$27 million. Meituan was founded by serial entrepreneur Wang Xing, who also founded Facebook clone, RenRen.com and Twitter clone, Fanfou.com.
Dataotuan on their blog said “As one of the first Group-buying sites in China, Meituan has always been focused on local service deals. We used our Deal Website Analytics Tool to look deeper into what made Meituan get to their current position.
Besides being the new number 1 in revenue, each month Meituan has been taken a bigger percentage of the top deals. It has the most top deals since Oct. 2011, which is sign of their deal quality. And it doesn’t stop there. Meituan’s average revenue per deal is much higher than the overall average revenue per deal. While in general the average revenue (per deal) keeps dropping, Meituan’s average revenue continues growing since August.
Looking into their pricing strategy, the interesting findings are that the average price of Meituan deals is significantly lower than the total level, meanwhile Meituan is lowering the average discount slowly but steadily.”
Meituan accounts for 12.5% market share by revenue, followed by Lashou (9.7%), 55tuan (9.6%) and 58tuan (7.6%). Unsurprisingly Gaopeng has dropped to 14th position with 2.9%.
If you want to know how much money you can actually save from deal sites, Dataotuan calculated the average discount is 64%.
In a sign that the deal market is stabilizing, November is the first month that the average revenue per deal stopped dropping and the average number sold per deal also stablized.
It will be interesting to see what the landscape looks like for the group-buying/deal site market next year. I suspect many more sites will close or change to a different business.
To get more insight into the group-buying market over the past month, check out the whole slide deck below.