Results also indicate that the global reach of Groupon at 2,364,000 unique visitors per day is about twice the amount of Lashou’s 1,038,000. However, when comparing other indicators such as the average monthly number of registered users and active paying users, Lashou has just about than 10% that of Groupon. Looking at the average monthly completed transactions, Lashou’s number stands at 41% that of Groupon. With the global influence that Groupon has, why does Lashou seem to enjoy much better sales performance?
Lashou Concludes Twice the Number of Deals per User than Groupon
Groupon’s market reach has spread internationally. Varying standards in terms of location, company structure, personnel and localization, all these need much time and effort to master. Lashou can afford to concentrate resources in an area, but Groupon has to deal with multiple markets at the same time and stretch its resources across different countries. This sometimes results in poor performance, for example the poor results of Groupon’s entry into the Chinese market(Groupon’s firm in China is named Gaopeng), the reasons which may require another article to give a clear explanation.
However, considering the monthly average number of deals bought per active user, Lashou concludes twice as many deals bought. This means that every active customer of Lashou purchases an average of 6 deals per month, while every customer of Groupon purchases an average of just 3 deals. Lashou has a higher rate of customer retention, despite the wide array of group buying firms available for consumers to select from in China.
China’s Group Buying Future Banks on Sales of Products over Services Deals
Lashou’s higher number of completed transactions can be attributed to the changing behavior of Chinese consumers.
With the stabilization of the group buying market, the trend seems to show that Chinese consumers are spending more on products instead of services.
Referring to the graph above, consumers are increasingly favoured towards purchasing products, because of the rapidly developing e-commerce market and convenience of local delivery systems in place. Purchase of products has reached up to 67% of total completed transactions, the highest since the inception of Lashou. With the gradual integration of group buying into the e-commerce market in China, more firms seem to be less inclined towards providing service deals, thus increasing the total number of completed transactions at a faster rate as well.
Groupon’s IPO Leads the Path for China’s Group Buying Firm Lashou
China’s Leading Group Buying Firms Incur More Losses than US Firms Due to Intense Market Competition
It is a force to be reckoned with. In comparison, Lashou’s financial figures are not as favourable as that of Groupon, despite having much lower net revenue. Operational expenses are crucial especially in the form of advertisement and building brand recognition in China. This also further proves the high barriers to entry for foreign firms, with Groupon seeming to follow the footsteps of Google and Ebay in the Chinese market.
Chinese Purchasing Power Still Growing Steadily
The Chinese market grows at an alarming rate, as proven in the rapid expansion of the group buying industry. On top of that, the average purchasing power of the Chinese may be much lower for now, but with China slated to become the world’s largest economy in a few years to come, this growth can actually be explosive.
Group Buying Model to be the Most Popular E-commerce Channel for Chinese Consumers
With more firms providing services that were once unique to traditional pure group buying companies, it seems that e-commerce has become more diverse, offering a myriad of services.
China has the largest internet user base in the world, and with proper development, group buying and e-commerce definitely have the potential to expand.
The comparison of the 2 companies may seem to conclude that Lashou’s financial future seems bleak. However, Groupon had a head start of 16 months in the market, and if Lashou were to sustain its current trend for another 16 months, we may possibly see another giant in the global group buying arena. On top of that, Lashou’s business model seems to be shifting gradually towards the provision of product deals and integrating group buying into the e-commerce spectrum.
With an entirely different market and playing field, especially considering China’s e-commerce market potential, many of these Chinese group buying firms may well go for the IPO in the near future.
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