Group buying a win-win game

10:03, June 01, 2010      

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Two students in Guangdong Province who developed 5151tuan.com - the Chineseversion of the Internet shopping phenomenon known as "group buying" - this year secured investment of 20 million yuan ($2.9 million) and now expect to expand their service to 50 cities across the country.

The power of group buying, which has become hugely popular in the US with Websites such as groupon.com, makes it easier for people to enjoy the best things in their community by offering daily deals at unbeatable prices.

It can sometimes decrease the cost by over half on the best things to do, see, eat and buy in a variety of cities.

Business owners Pan Wenwei and Zeng Shixiong are still juniors at the Sun Yat-Sen University in Guangzhou, where they are studying for their MBA and information security degrees respectively.

Their 5151tuan.com Website is modeled on the Chicago-based groupon.com, which of-fers its services in more than 140 cities across the world. Up to now 5151tuan.com has launched in 15 major cities in China including Beijing, Shanghai, Guangzhou and Hangzhou.

Staff members of the website negotiate with local merchants to get huge discounts on the items they sell online.

Customers can register and pay online, and after three days, if the number of people wanting to buy the same item reaches 50, the deal is activated and the customer gets the item express mailed to them.

If the figure is not reached, the Website returns the customers' money.

Adapting the concept

Zeng stumbled across groupon.com late last year, and was inspired.

"Their website secured investment worth $135 million last year," Zeng said. "With the consumer demand and the use of online shopping developing so rapidly, I thought it would work well in China too."

Zeng shared the idea with Pan, an old friend and schoolmate, and they agreed.

With 5 million yuan from their previous real estate investments and electric magazine business as the initial fund, they set up the Website to cover eight major cities and hired nearly 100 people.

Formal operations began in mid-March, and the idea proved a big hit with merchants as it introduced new customers.

Even if the deal failed, the Website was free advertising for them.


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