Thursday, November 10, 2011

It’s an open secret that Groupon is failing miserably in China.

On the surface, it seemed like the American-based group buying site, Groupon, had what it takes to succeed in China. China’s sloppy regulation of online businesses is the perfect breeding ground for online scams. This is why local chinese consumers are generally wary when it comes to shopping online. Groupon, with its reputation of being a globally renowned, reliable group buying site, seems to be just what Chinese e-shoppers are looking for.

So why aren't Chinese consumers flocking to the site, comforted by the knowledge that they can finally shop online with a peace of mind?

Unfortunately, despite being lax in its regulation of online businesses, the Chinese government ironically has a tight-fisted control over its citizens’ access to foreign websites. Therefore, with no access to major international social networking websites like Facebook, Twitter and even Youtube, there is little opportunity for local Chinese consumers to come into contact with the Groupon brand prior to its launch in the country. Simply put, due to China’s strict internet censorship policy, few local Chinese consumers would have heard about Groupon, and even less so its reputation.

However, having no known reputation prior to its launch certainly did not put the nail in Groupon's coffin.

According to Edward Yu, chief executive of Beijing-based Analysys International, “The consumer [in China] doesn't really care who is who. As long as the browsing experience is good, the price is good, they don't care who is providing the service".

Although this means that competition is stiff in the Chinese market, even for old-timers, this also implies that Groupon China had the opportunity to surpass its already established competitors, had they put in the effort to constantly value add and differentiate themselves.

Sadly, having compared Groupon China’s website,, against its major competitors’ ( and, I felt like I saw three similar sites, only in different colors. All three sites had similar-looking layout, fonts, and even products and offers – and I’m not even talking about Groupon China’s biggest copycat/rip-off,

Honestly, I was disappointed because I expected much more from Groupon. From the Chinese consumer's POV, there doesn’t seem to be much incentive to switch from using other already more-established group buying sites to

Speaking of reputation, there is a Chinese idiom that says "good news never go beyond the gate, while bad news spread far and wide”. According to research conducted by Nielson Wire in 2010, bulletin board systems underpin popular social media behavior in China – more than 80 percent of social media content is bulletin board systems. The research further elaborated that Chinese Internet users are the most likely in Asia Pacific to post a negative online product review, and are the only consumers in the region more likely to share negative reviews than positive reviews.

This is a warning which businesses in China should never ignore because any mistakes they make will most certainly not pass without (online) commotion.

Unfortunately (again!), just early this week, news broke that Groupon China had sold counterfeit luxury watches to hundreds of shoppers via its site.

To confirm my suspicion of the expected consequence, a quick search on popular Chinese search engine showed that the top 5 search results of ‘’ were criticism over Groupon's accidental "fraud".

I have very bad news for Groupon – there is also a Chinese idiom that says “bad reputation lasts ten thousand years”.

Now that might just be the last nail in the coffin.

The above are my opinions from a digital marketer’s POV. For a business POV, check out this and this.

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