CRI听力:Group Buying's Elimination by Competition

Sun Haidi, deputy director of the marketing department of group buying website Nuomi.com, says she has witnessed great changes in the group buying industry over the past couple of years.

"Group buying websites have undergone great changes over the past six months, the number of websites has decreased by 40 percent. Even those that are listed as top-ten players have also undergone big changes. Some of them have been eliminated from the top-ten list."

According to a group buying website search engine, there were nearly three-thousand group buying websites still active in China by the end of May-equal to the number in 2011. Nevertheless, about 2,000 local group buying websites have shut down over the past several years.

Industry insiders say the reason for their failure is that they simply relied on low prices to attract customers rather than pay attention to their service quality.

Hong Bo, an industry insider, shares his view.

"The group buying industry has very low entry threshold, so suddenly you may find thousands of group buying websites operating. However, many venture capital investment firms stopped investing in the industry due to disorderly competition, making it very difficult for these group buying websites to make a profit."

With fierce competition in the industry, the group buying sector has been gradually taken over by large players.

Zuo Xiao, marketing director of Meituan.com, says the relationship between group buying websites and client companies has changed dramatically.

"For those client companies that want to put their products on our websites, they are required to submit applications to us. Less than 10 percent of the applications are accepted, which means we won't accept the remaining 90 percent as our corporate clients."

As additional group buying websites are eliminated, the players that remain in the industry gain more power to speak and more opportunities to develop.

For CRI, I am Zhang Wan.