Lashou is said to be the first Chinese group buying service that has anyway managed to make profit, according to people close to the site.
Lashou refused to comment on the matter when being approached.
The Beijing-based company was reportedly selecting CCIG (China Capital Investment Group) and Nomura Securities as new main underwriter for its initial public offering in the fourth quarter of this year with an aim to raise between US$ 100 million and 200 million at US$ 1.1 billion valuation.
In a time that Groupon decides to delay IPO and its Chinese counterparts struggle to at least break even amidst a string of rumors of shedding staff, running out of money, there’re a lot can be read into Lashou’s pleasant surprise, like “it works” or “size matters” or, maybe “gross margin doesn’t rule given…”
Founded in March of last year, Lashou now run daily deals in more than 500 cities in China (the number can be expected to be over 1000+ according to its founder Wu Bo) and is the first one of its kind to offer multiple deals per day, which is now a standard operating model widely adopted by almost every daily deal sites in China.
OuYang Yun, Gaopeng (JV of Groupon and Tencent in China) COO once claimed that gross margin for Chinese daily deals sites is less than 10% as compared to Groupon’s average 50% per deal.
According to daily deals aggregator Tuan800.com, as of this August there’re 5039 group buying service competing in the forefront while more than 1000 Chinese Groupons were shut down by the end of this September with gloomy funding picture as major cause.
The Group buying market was amazing, then crazy, and now funny…
Lashou is making about several tens of million (the gross margin) – but in doing so, it is losing several hundreds of million, in advertising, running its team in hundreds of cities in China. All in all, its profitability is nothing but a myth.
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