Team-buying websites in China urged to exercise restraint
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After a year of steady growth, group purchasing websites in China have been told to exercise self-discipline and be reasonable in their business operations.
Web designing software similar to Groupon, two or three technicians, a few marketing staff members and few hundred dollars -- that's all it takes to operate a team-buying website. And if enough time is spent, marketing ideas from rivals can be copied.
A total of 1,726 team-buying websites had surfaced in China by the end of last year. Meituan.com, the country's first Groupon-like site, was launched in March last year.
The number of such sites are still rising fast. While many online consumers participate in team-buying for low prices and convenience, experts warn that team-buying is prone to improper competition in an unregulated market.
A consumer website set up by the China Electronic Chamber of Commerce received 850 cases of complaints regarding the practice last year. The complaints ranged from goods that were fake and substandard, delayed deliveries and failure to deliver goods after payment.
Common tricks played by team-buying sites include huge discounts for overpriced products and fabricating the number of consumers involved in a purchase to attract more buyers.
There were also instances when a website would disappear once money was collected from consumers.
According to an industrial credit report from the Internet Society of China issued last November, the country's team-buying industry achieved only 63.3 out of 100 points, or a credit grade lower than the average.
Beijing-based lawyer Dong Zhengwei said that it is hard for consumers to receive protection because the country has no existing laws or regulations that provide details for team-buying.
"In many cases, consumers can only provide a website address, which makes it hard to identify the defendants and costly to file a lawsuit," Dong said.
Urging group-purchasing sites to exercise self-discipline in their operations, experts predict an industry reshuffle in the coming years.
"Many small team-buying sites will be bought or simply quit the market," said Su Huiyan, an analyst with iResearch, a leading research organization on China's online media and e-commerce.
Figures show that from March to August last year, more than 200 Chinese group-purchasing sites were closed. Following a year of growth, many team-buying websites have already mapped out their future plans.
After paying huge compensation to consumers due to the closure of a partner group involved in online game coins, Nuomi.com, one of the country's leading team-buying sites, announced in November last year that it would shift its business focus to high-class products that cater to local white-collar workers.
According to previous reports, the website will give priority to building its credit by only cooperating with large partners. Meanwhile, several other sites have begun to focus on more specific retailing fields such as cosmetics products and food.
"These group-buying websites should strive to improve their market, not ruin it," Internet expert Fang Xingdong said.
