Difficulties and changes in group buying model seen from the crisis of Groupon and LivingSocial

 

group purchase and long tail products is the modern Internet two era of e-commerce business model of the most classic. The group purchase in different time and space consumption system set up to get the wholesale price is reverse, the subversion of the traditional way of sales has been broke. The long tail products can only store selling products sales Co., limited to unlimited sale possible today to talk about the group purchase. The first point is the need of special note is the traditional wholesale, group purchase reverse mode, is not what fresh things. There is a very long time ago. Just before the sales organization is in the group purchase, a small range attempt is very simple, such as in the same unit. It used to be different in different regions of the time to gather the demand is very difficult. The advent of the Internet, greatly solve the information asymmetry situation, let the group purchase to re radiate new life! In a very short period of time, both at home and abroad are the rise of a large number of group purchase start-up companies, want to dig into the pot of gold in gold mine in the internet. Among them, the United States Groupon and LivingSocial for others, technology and advanced concepts and become the industry benchmark.

but, buy Group website development did not resemble Amazon big business model to be so smooth sailing. Recently, Groupon, the founder of global group buying, has been fired from founder Andrew Mason because of poor stock performance. Groupon’s issue price of $20 per share rose to $31.14 in just a few hours, followed by a slow and painful decline. On the day Mason left Groupon, the company’s share price had fallen to $4.24 a share, a 79% lower than the initial public offering, down 86% from its all-time high on the first day. In addition to the IPO stocks usually experience soaring plunge deeper problems in the profit model on the body.

, followed by the American group buying site, LivingSocial, is nowhere to go. The financial situation has been worrying in the first half of the year since November, when layoffs and offices have been closed. In 2010, Amazon invested $175 million in LivingSocial, leaving LivingSocail without a two chance. But last year, Amazon cut LivingSocial’s assets by $169 million. Amazon’s filing showed that LivingSocial lost $50 million in the first quarter of this year, compared with $156 million in LivingSocial in the same period last year. LivingSocial goes into the list of 10 brands that analysts predict will be dying next year.

China’s large number of group buying, crisis and death are mainly caused by fierce competition. Minority market, increasing the number of porridge is the root cause. Obviously, Groupon and LivingSocial have problems, definitely not

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