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55Tuan Taking over Ganji Group Buying Operation

Ganji.com, the Chinese classified site announced yesterday to cede operation of its group buying business to 55Tuan.com, another bigger player in the market.

The move shouldn’t be a big surprise and definitely doesn’t come out of blue since earlier last month, the Beijing-based company was rumored to cut off its group buying arm. Though Yang Yonghao, founder and CEO of Ganji later rebuffed the claim saying the business would be retained while some staff would be transferred to serve its new short accommodation service Mayi.com, a focus shifting in its product lines. Neither Ganji nor 55Tuan elaborates how the tie-up works exactly. Will there be any upcoming downsizing, or how they share the revenue or else. And although the two deemed it as a “strategic cooperation”, but it didn’t totally rule out the possibility that 55Tuan might want to outright buy out the business.

A report out lately by Tuan800.com, the group buying market observer, Ganji group buying business made it to the Top 10 Chinese group buying services by sales with a transaction volume of RMB 47.2 million in January of this year, but came in 10th in the list, lagged behind its arch rival 58’s group buying business (8th, RMB 75.5 million). As Ganji is selling off relatively irrelevant business, 58, the arch rival of Ganji actually implied that it would step up the daily deal business with more resources.

In last year’s group buying frenzy, numerous Chinese Internet companies flocked into the market, including Ganji, 58, 360buy, Dianping and even portal sites like Sohu and Sina. As the so-called winter came and many group buying services are struggling, we can expect to see more mergers in the market.