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How One Chinese Company is Ditching Group Buy, and Why It’s Paying Off

We’ve written lots of stories about how tough the group buy market is in China. And while a few sites seem to be doing OK, most are struggling. The smart ones may be the ones who are leaving the business entirely and moving into new markets in search of greener pastures. 36tuan — now called Zhiwo mall — is one such site. Formerly a group buy site for cosmetics, 36tuan has recently made some serious changes. The name — which in Chinese implies that it’s a daily deals site — is out, replaced with the more broad moniker “Zhiwo Mall.” And, like the name suggests, the site is transitioning to a more traditional ecommerce platform, with a mallfull of brand-name products already live online. Though it’s listed as “beta” for the moment, it appears to be fully functional. The changes also caught the attention of investors, and Zhiwo announced today both the name change and that they had received an investment from Baidu (NASDAQ:BIDU) and IDG for $10 million. Zhiwo’s CEO Su Haizheng said the money would be spent on the sorts of things you’d expect a fledgling ecommerce platform tobe spending on: warehouses, distribution, customer service, etc. Zhiwo isn’t entirely abandoning the group buy model. At least for now, the site still features daily deals on the front page. But CEO Su Haizheng said the changes were necessary, as the shift from group buy to B2C was a trend in the cosmetics market they couldn’t escape. And expanding and broadening the company meant a name change was essential, too.