During the second quarter of this year, the number of Chinese mainland websites specialising in "group buy" business models was estimated at over 400. Some analysts put the latest number at over 900 by the end of July 2010.
The Mainland's four leading portals launched their own "group buy" websites last July, with Sohu's iHome and Sina's sites closely following on the heels of Tencent's QQ Group and its so-called Buy Mall.
However, the operations of Sohu's and Sina's websites are both outsourced to other Internet companies. According to analysts, portals are of great importance in the development of "group buy" models and could trigger a major reshuffle in the industry.
The majority of existing Web 2.0 (user-generated content) group buys websites on the Mainland model themselves on the US site, Groupon.
A new product is launched each day, with a "buy" button shown on the home page. The current and original prices of products are both shown, usually with huge price differences. Discount rates and price differentials are given. Unlike the old 1.0 version, prices are negotiated between the website and the suppliers under Web 2.0.
China's "group buy" websites all operate in a similar pattern. Every group buy website regularly update the latest bargains, with the original price, group buy price, money saved and discount rate clearly marked.
Group buyers only have to hit the "buy" button and pay the required amounts. When the number of buyers reaches the lower limit for group buy, it means that a buying group has been successfully formed and the supplier will ship the orders in a unified manner.
Commodities range from small items like toys, books, cosmetics, mobile phones, digital products, computers and home appliances to big items like furniture, building materials and even real estate.
Service has even been extended to tourism, physical fitness, bridal photography, education and training.
Small- and medium-sized websites will come under increasing financing pressure after the leading portals joined the competition. The shortage of funds should make the going very tough when they try to expand operations.
So far, suppliers and users are positive about the "group buy" business proposition. As long as the sites can bring their advantages into play, the market can't be monopolised by just a few leading portals.
By the same token, some "group buy" websites with a shortage of resources and clients will gradually be forced out of competition.
