As suspected, the unsustainable group-buying business model with very thin profit margin of 4% in China, coupled with fierce competition has wounded Groupon.cn badly. Beijing Daily reported yesterday, that they have made a major downsizing from 4,000 to around 700 employees.
When Groupon.cn first launched in China, I really thought they were the actual Groupon.com operation of China. The logo was the same and everything else looked the same. There were even celebrities plastered on their ads, a result of their huge advertising budget of 500 million yuan. This far outstrips both the leaders, Lashou and Meituan’s advertising budget of 200 million yuan.
This dramatic structural lay-off, follows Gaopeng’s infamous downsizing of 400 staff and closing of 12 branches last month.
The blood is starting to float to the surface of the ocean. Who is next?