Wowo Ltd. (or 55Tuan), one of the first group-buying services in China, recently filed for US IPO as a local lifestyle e-commerce platform. The company plans to raise just US$40 million from the IPO, so the offering doesn’t look like it is intended to raise funding. It’s likely to do with rumors that Meituan and Dianping, currently the leading Chinese group-buying services, are planning for US IPO too.

March 2010 marked the beginning of China’s group-buying market, with a wave of Groupon clones launched that month, including 55Tuan, Meituan and LaShou. Some other Chinese online services such as Dianping, the leading ratings and reviews site, would add group-buying to their existing offerings.

55Tuan and LaShou were the most aggressive over the next few years in terms of fundraising, headcount and marketing. Each had raised about US$150million in funding by 2012.

LaShou claimed it was the biggest group-buying service when filling for US IPO in October 2011. 55Tuan claimed it was the biggest in March 2012, Xu Maodong, CEO of 55Tuan, has said in a recent interview (report in Chinese).

Thousands of group-buying sites launched after 2010 would be eliminated by 2014. LaShou suspended its IPO and, together with 55Tuan, was surpassed by rivals Meituan, Dianping and Nuomi.

Meituan is believed the current market leader with over 50% of the market in terms of gross merchandise volume, with Dianping coming second. Meituan claims its share exceeds 60% at the end of 2014. Dianping has an around a 20% market share, which is expected to continue to grow following its integration with WeChat, the most popular messaging app in China. Nuomi, acquired from Renren by Baidu, is thought to be the third largest.

LaShou, 55Tuan and the other surviving platforms have a single digit market share percentage combined.

Local Lifestyle E-commerce Platforms: Sounds Better?

Chinese group-buying services charge about 5% commission and earn minor revenue from advertising, which is hardly able to generate profits.

Meituan’s business strategy is to lower costs through technology and economies of scale. Meituan’s CEO Wang Xing argues that group-buying would ultimately be concerned with, instead of total sales, online marketing for offline businesses, just as Google has become to physical good sellers. The company claimed it turned a profit by the end of 2013, though not releasing its results at the end of  2014.

55Tuan management’s strategy was creating “a local lifestyle e-commerce platform” where they could charge higher commission. The company began another approach with the launch of Wowo Mall, an online distributor of products and services for offline businesses, in October 2011. Wowo Mall’s layout, however, is no different from that of a group-buying site.

Mr. Xu said (in the interview mentioned above) that the commission rate from offline businesses could be 7-8%. The performance of WoWo Mall so far hasn’t be quite so successful. In the first nine months of 2014, 35% of 55Tuan’s total revenue, US$7.3 million, was from Wowo Mall.

Editing by Mike Cormack (@bucketoftongues)

Tracey Xiang is Beijing, China-based tech writer. Reach her at

Join the Conversation

1 Comment

Leave a comment

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.