CRI听力: China's Online Group Purchase Market Faces Many Problems

Group purchase mushroomed in China in the past year. There are now more than a thousand websites in China that organize online group purchases of various goods and services. But this popular way of purchasing has created many problems for customers, websites and merchants alike.

Let's take a look at this fun market with reporter Liu Min.





Many sellers have found joining group purchase websites to be a good way to attract customers.

Cao Bo, General Manager of Jiahe Cinema in Beijing, says his business has skyrocketed since it posted an advertisement on a group purchase website.

"We only had 300 moviegoers a day when we first started the business, but over one weekend more than 4,900 people rushed in to watch movies after we offered an online group ticket purchase."

Lower prices for goods and services are the reason why many consumers have joined the online group purchase craze. But to attract even more buyers, merchants are sometimes forced to sacrifice profit or reduce base costs.
 
Some customers complain that the services they purchase online are quite different from what they had expected.

"The group purchase websites usually put up big advertisement pictures on their websites such as colorful dishes and pleasant restaurant environments to attract people. But when I went to one restaurant, I found it was too crowded and not spacious. The cuisine was obviously not good quality—just some discount stuff."

The entire market appears to be in total chaos. Only three months ago, there were 300 such websites, and the main services they offered were gym, spa and entertainment coupons. But now, all kinds of products are being promoted as online group purchases, with as much as 20 percent off on some cosmetics.

Nuomi.com is among the most popular online group purchase websites and has more than 500 thousand members. Now many major portals with billions of members such as Sina.com and Sohu.com have also joined the game. By the end of July, the number of group purchase websites had topped one thousand.
 
At the same time, the intensive competition has also caused more than 200 small websites to go bankrupt during the business boom.
 
Shen Boyang, Manager of Nuomi.com, says his business is secure because it has stable customer resources.

"Compared to the small websites, our advantage is having strong and solid background supporters like Renren.com which has thousands of members."

But for smaller group purchase websites, their share of the market seems to have been marginalized. Big brand-name sellers have been claimed by large websites, leaving small-scale ones to hunt among local merchants.
 
Zhu Min is Chief Executive of Didatuan.com.

"We don't have to pursue the goal of attracting thousands of customers, but try to ensure every customer who has joined group purchases on our websites has a happy experience."
 
Many group-buy enthusiasts in China are known as "tuan fan," which means "group purchase fans." Some of them stay online late at night to get the best goods and services as soon as many websites update their offerings just after midnight.

For CRI, I'm Liu Min.