This document discusses group buying in China. It notes that the group buying sector generated 500 billion yuan in 2010 and saw a large growth in sites from 4 to nearly 1,700 between 2009 and 2010. Group buying works by offering limited-time deals on a website, with discounts triggered only if a minimum number of purchases is met. However, consumer retention is a challenge given the one-off nature of deals. The document also provides an overview of a company called SinoTech Group and its offerings in digital marketing and social media consulting.

1. Tuangou- Group Buying in China Jan 2011

2. Agenda
• Chinese Group Buying ‘Fast Facts’
• Group Buying Concept
• Group Buying Issues
• Fast Facts- SinoTech Group
sinotechgroup.com.cn

3. The Landscape
How does the Group Buying
sector look in China?
sinotechgroup.com.cn

4. Chinese Group Buying Fast Facts
500 billion yuan (75.4 billion U.S. dollars) was made
in group buying sector in China 2010
Group buying sites grew dramatically from 4 at the
beginning of 2009 to nearly 1,700 by Dec 2010
China International Electronic Commerce Center
(CIECC) passed regulations on Oct. 29, 2010
stating that group shopping sites should obtain
licenses to participate in the business
Source: Chinese Academy of Social Sciences
sinotechgroup.com.cn

5. Group Buying Adoption Expands in China
10 million Chinese used
Groupon-like sites in October
2010, up from 5 million in July
iiResearch Consulting Group
sinotechgroup.com.cn

6. What’s dominating the Offers?
sinotechgroup.com.cn

7. Looking Good for Make-up
sinotechgroup.com.cn

8. The Chinese Group Buying Sites (Main ones)
and……Groupon/Tencent JV is rumored to be announcing soon
sinotechgroup.com.cn

9. Lets ‘deep dive’
How Does Group Buying Work?
sinotechgroup.com.cn

10. Group Buying Concept
Each deal is only available for a limited amount of time
(1-3 days normally)
Users can check the group buying websites or
subscribe to SMS or email notifications.
sinotechgroup.com.cn

11. Typical Group Buying Rules
Typical structure
1. Unless a minimum number of deals are purchased,
nobody gets it!
2. Once the target set by the merchant is met, the
deal is triggered
sinotechgroup.com.cn

12. It’s About the Group
Spread the Word
The whole idea is to provide great discounts for bulk/
group purchases. Social Media has become a key to
this model.
sinotechgroup.com.cn

13. Final Thoughts on
The Challenges for Group
Buying Sites
sinotechgroup.com.cn

14. The Challenges for Group Buying Sites
- Consumer Retention is Difficult…
- You get deal driven consumers not long term
customers, you don t own the email and
customer retention is low
- Limited network effect because the deals are
one-off
- Clones don t require exclusivity on deals
sinotechgroup.com.cn

15. The Challenges for Group Buying Sites
The number of players means commission levels are
being eroded far from the 40-50% that offers sites
want to achieve down to 0% just to get the deal. This
will continue until a clear leader emerges.
Some large Chinese Search & Portals eyeing this
sector and can make significant inroads in a short
time by leveraging their netizen and advertising
base.
sinotechgroup.com.cn

16. Humble Suggestions
This is a highly competitive sector with a low barrier
to entry.
It’s all about the ‘offer’ – focus on securing the
best valued products and venues
Without the offer you having nothing but a
trafficked sites (or not) that is not making sales
Suggestion: Build the distribution list first, then use
that as leverage to get and offer the best
products/venues
sinotechgroup.com.cn

17. About SinoTech Group
sinotechgroup.com.cn

18. SinoTech Group - Fast Facts
• Consists of two brands: Digital Jungle (Digital
Agency) & SinoTech SIP (Social Media Tech/
Consulting)
• Heritage in software development
• 95 employees (combined)
• Global reach
• Independent
• Offices in Beijing, Shanghai & Hong Kong
• Founded in April, 2007
sinotechgroup.com.cn

19. Thank you -
Dr Mathew McDougall | @sinotechian
sinotechgroup.com.cn | @sinotechgroup
sinotechgroup.com.cn