Group Buying Market in China

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Since March 2011, group buying business model was introduced to China and it gave rise to tremendous growth of e-commerce in the country. According to the report published by LetYo.com, the market size of china’s group buying has reached USD 560 million (CNY 3.7 billion) while the number of group buying websites has reached 2 thousands in December, 2010.

Text of Group Buying Market in China

  • 2011/02/22

    AHN SEUNGHAE, Chinas Group Buying Evangelist/ CEO

    LetYo.com, The Chinas Best Group Buying Search!

    The Chinas Best Group Buying Search!

  • -2- 2011 LetYo.COM All rights reserved.

  • -3- 2011 LetYo.COM All rights reserved.

    Value Chain of Group Buying in China

  • -4- 2011 LetYo.COM All rights reserved.

    Suppliers Customers Group Buying

    Sites

    Service Suppliers Product Suppliers

    Service Oriented Product Oriented Hybrid

    Credit Certification

    Ministry of Commerce Certification

    Hardware/Network Offline Service

    Provider

    Network Service Provider Server, Software and Hardware Supplier

    Delivery Customer Service Outsourcing

    Outsourcing supplier

    Offline Media

    News Paper Magazine

    Online Service

    Provider

    Site Solution Provider Bill/Payment Service Provider

    Help to Promote

    Help to Operate

    Group Buying

    Search/Aggregators

    LetYo.com Hao123 and so on

    Online Media

    SNS\Internet Sites Portal

  • -5- 2011 LetYo.COM All rights reserved.

    The Current Market Trend of Group

    Buying in China

  • -6- 2011 LetYo.COM All rights reserved.

    The Growth of the Group Buying Website (Accumulated)

    (March-December 2010

    SourceReferred from LetYos record on its website

    2010 (LetYo) LetYo.com

    21 85

    238 366

    553

    782

    1,008

    1,388

    1,708

    1,964

    -

    500

    1,000

    1,500

    2,000

    2,500

    Amount

    Referring to the statistic made by LetYo.com, there are 2,000 Group Buying websites being setup in

    China within 10 months. Between these 10 months, the Compound Monthly Growth Rate of Group Buying Website is 66%.

  • -7- 2011 LetYo.COM All rights reserved.

    1 6 22 76

    175

    378

    564

    657

    858

    991

    -

    200

    400

    600

    800

    1,000

    1,200

    Amount (in CNY million)

    Market Size of Group Buying in China, by Amount of Purchase

    (March-December 2010)

    SourceReferred from LetYos record on its website

    2011 (LetYo) LetYo.com

    The accumulated sales of the industry has increased from CNY 175 million to CNY 991 million between April and

    December in China. According to the report published on October 2010 [4][5], the accumulated sales forecast is

    CNY 3.1 billion. However, the fact shows that the actual accumulated sales has reached CNY 3.7 billion.

  • -8- 2011 LetYo.COM All rights reserved.

    2 16 41 163

    367

    822

    1,149

    1,528

    2,196

    2,409

    -

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    Number of Buyers (in 10,000 people)

    Market Size of Group Buying in China, by Number of Buyers

    (March-December 2010)

    SourceReferred from LetYos record on its website

    2011 (LetYo) LetYo.com

    In 4 months time, the number of buyers has reached 1.63 million people and it continue to rise at

    a rate of 1350% by November. Although repetition of buying may occur, the market size of group

    buying industry is more than 20 million people towards the end of year 2010.

  • -9- 2011 LetYo.COM All rights reserved.

    101 477 1,488 3,371

    7,409

    15,584

    20,886

    29,553

    48,411

    56,700

    0

    10,000

    20,000

    30,000

    40,000

    50,000

    60,000

    Deals

    The Growth of the Total Number of Group Buying Deals

    (March-December 2010)

    SourceReferred from LetYos record on its website

    2011 (LetYo) LetYo.com

    The total number of deal has reached 20,000 and 50,000 by September and December 2010

    respectively.

  • -10- 2011 LetYo.COM All rights reserved.

    225

    333

    275

    484

    495

    527

    550

    517

    454

    425

    13,059 13,079

    15,508

    25,990 28,192

    33,932

    40,557

    31,127

    24,807 24,468

    0

    100

    200

    300

    400

    500

    600

    2010/03 2010/04 2010/05 2010/06 2010/07 2010/08 2010/09 2010/10 2010/11 2010/12

    -

    5,000

    10,000

    15,000

    20,000

    25,000

    30,000

    35,000

    40,000

    45,000

    Average Number of Buyers per Deal

    Average Number ofBuyers per Deals

    The Average Incomeper Deals

    Average Income per Deal

    Average Income per Deal and Average Number of Buyers per Deal

    (March-December 2010)

    SourceReferred from LetYos record on its website

    2011 (LetYo) LetYo.com

    Among these 10 months, the average number of buyers per deal is 428 people while average sales income per

    deal is CNY 25,072. Due to the tremendous growth of Group Buying websites, the rate is decreasing after

    September of 2010.

  • -11- 2011 LetYo.COM All rights reserved.

    Category Analysis of Group Buying in

    China

  • -12- 2011 LetYo.COM All rights reserved.

    Classification of Group Buying Deals

    (March-December 2010)

    Food & Drinks 26,096

    14%

    Entertainment 29,137

    16%

    Healthcare & Beauty 16,933

    9%

    Accessories 56,856

    31%

    Cosmetics 47,706

    26%

    Other 7,285

    4%

    SourceReferred from LetYos record on its website

    2011 (LetYo) LetYo.com

  • -13- 2011 LetYo.COM All rights reserved.

    Total Amount of Purchase for Each Category, in CNY million

    (March-December 2010)

    Food & Drinks 460 12%

    Entertainment 543 15%

    Healthcare & Beauty

    219 6% Accessories

    1169 31%

    Cosmetics 1282 34%

    Other 57 2%

    SourceReferred from LetYos record on its website

    2011 (LetYo) LetYo.com

  • -14- 2011 LetYo.COM All rights reserved.

    Regional Analysis of Group Buying in

    China

  • -15- 2011 LetYo.COM All rights reserved.

    The Distribution of Group Buying Websites in Main Cities

    (March-December 2010)

    SourceReferred from LetYos record on its website

    2011 (LetYo) LetYo.com

    653

    456

    166

    97

    85

    71

    67

    56

    65

    60

    50

    48

    38

    40

    31

    28

    34

    32

    31

    29

    29

    37

    25

    25

    37

    30

    328

    0 100 200 300 400 500 600 700

    Nationwide

    Beijing

    Shanghai

    Guangzhou

    Shenzhen

    Tianjin

    Hangzhou

    Wuhan

    Nanjing

    Chengdu

    Xian

    Changsha

    Suzhou

    Jinan

    Xiamen

    Wuxi

    Chongqin

    Zhengzhou

    Qingdao

    Fuzhou

    Ningbo

    Shengyang

    Hefei

    NanChang

    Shijiazhuang

    Dalian

    The Other 68 Cities

    Number of Websites

  • -16- 2011 LetYo.COM All rights reserved.

    The Total Number of Buyers in Each Main Cities

    (March-December 2010)

    SourceReferred from LetYos record on its website

    2011 (LetYo) LetYo.com

    4,071

    2,320

    1,708

    349

    280

    302

    167

    335

    193

    151

    133

    109

    85

    76

    72

    818

    71

    67

    71

    34

    49

    48

    42

    35

    47

    26

    448

    - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

    Nationwide

    Beijing

    Shanghai

    Guangzhou

    Shenzhen

    Tianjin

    Hangzhou

    Wuhan

    Nanjing

    Chengdu

    Xian

    Changsha

    Suzhou

    Jinan

    Xiamen

    Wuxi

    Chongqin

    Zhengzhou

    Qingdao

    Fuzhou

    Ningbo

    Shengyang

    Hefei

    NanChang

    Shijiazhuang

    Dalian

    The Other 68 Cities

    Number of Buyers (in 10,000 people)

  • -17- 2011 LetYo.COM All rights reserved.

    Comparative Analysis of Chinas Top 10 Group Buying Websites

  • -18- 2011 LetYo.COM All rights reserved.

    The Deals Trend of Top 10 Group Buying Websites

    (March-December 2010)

    SourceReferred from LetYos record on its website

    2011 (LetYo) LetYo.com

    14 57 129

    330

    712 818

    1,537

    1,154

    1,896

    2,261

    0

    500

    1,000

    1,500

    2,000

    2,500

    0

    50

    100

    150

    200

    250

    300

    350

    400

    450

    500 (lashou.com)

    (meituan.com)

    F(ftuan.com)

    (nuomi.com)

    (t.dianping.com)

    (manzuo.com)

    (didatuan.com)

    58(58tuan.com)

    24(24quan.com)

    QQ(tuan.qq.com)

  • -19- 2011 LetYo.COM All rights reserved.

    The Buyers Trend of Top 10 Group Buying Websites

    (March-December 2010)

    SourceReferred from LetYos record on its website

    2011 (LetYo) LetYo.com

    3 12 23 139

    350 553

    5,036

    1,011

    2,448 2,208

    0

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    0

    200

    400

    600

    800

    1,000

    1,200

    1,400

    1,600 (lashou.com) (meituan.com) (nuomi.com) QQ(tuan.qq.com) (t.dianping.com) (manzuo.com) (didatuan.com) 58(58tuan.com) 24(24quan.com) F(ftuan.com)

    Number of Buyers

    (in thousand people)

  • -20- 201