Rumor has been whirling that group-buying site Didatuan is pursuing a merger with coupon vendor VELO. An agreement has been reached for VELO to acquire the group buying service, according to people familiar with the matter. The rumor came as a latest signal of the breakdown in Chinese group buying sector.

IDG-backed Didatuan was founded in July 2010. After two and a half years of developments, it remained to be a mediocre player judging by user number, traffic and service. Though the company claimed to be on verge of “breaking even”.

Shanghai-based VELO was founded in 2006 and has raised three rounds of funding 2007 through 2010; the company helps local merchants like McDonald’s distribute coupons. Consumers can help-themselves print out paper-based coupons via its vendor machines scattered in metro stations and shopping malls in cities like Beijing and Shanghai.

VELO has been doing quite well till recently dotcoms like Dingding (online coupon), Dianping (business review and online coupon) and Buding (online coupon service) ventured in to the territory of coupon distribution via the powerful combination of their online technology and offline resources in a trend or hype dubbed online to offline business.

That’s probably why VELO needs to acquire an O2O-oriented group buying service to complement its strength on offline end.

CEO of Didatuan Song Zhongjie once said that just by simply merging group-buying sites would not necessarily make them stronger because most of them have the same system and structure. Last year, Gaopeng, the JV of Groupon and Tencent merged with FTuan, but still struggle to make better impressions.

VELO also operates its own website to engage users

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动点科技驻湾区记者. Charlie is an entrepreneur based in San Francisco and Hong Kong who calls herself the undefeated caffeine champion. You can reach her at charlie.sheng (at)

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