Group buying picks up after slump
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China Daily, October 3, 2011
The group buying industry in China has gradually regained popularity after a first quarter slump this year.
The number of group buying users hit 42 million at the end of June, up 125 percent from that of December last year, according to data from the China Internet Network Information Center.
This surge is attributed to leading websites improving their customer service and strengthening self-regulation, after many buyers complained of poor service and low-quality products.
China is considered a pioneer of group buying, in which a group of individuals join to collectively purchase identical products from a merchant who is willing to offer discounts for bulk sales. As of June this year, there were about 5,000 group buying websites in China, according to a report by Analysis International.
Subscribers purchase goods online or receive coupon codes via cell phone for items or services to be consumed offline and the websites distribute the money to the vendors after deducting about 10 percent as their fee.
It is mainly the younger generation that engage in group buying according to Jiang Qiping, secretary-general of the Information Research Center at the Chinese Academy of Social Sciences(CASS).
"Age, income and educational background affect people's willingness to enter the groupbuying fray," said Jiang. "So far, young, middle-class people with convenient Internet access account for a large proportion of group buying shoppers."
However, Jiang expects lower-income consumers will eventually start group buying when online transactions become more widely available, and vendors that sell traditional commodities, such as pharmaceuticals or books, enter the industry in greater numbers.
For vendors, group buying is a way to introduce their business to more consumers, according to Ni Shenghui, board chairman of Hua'an Yugong Corp, a hot pot restaurant that started operating in Beijing more than a year ago.
Lu Yongliang, 29, promoted his photography studio named LoveLyye on a group buying website in July, 2010.
"We put a 99-yuan photography service on a group buying website for one week and it attracted hundreds of customers and about two hundred bookings," said Lu.
"We were not aiming to make money, but build our brand," he said.
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