Groupon's China site big in visits, behind in sales

About a month after offering its first discounted deals, Groupon's China site is attracting big user numbers, but still lags behind the local competition in sales, according to a group-buying aggregator in the country.

The U.S. company's site at GaoPeng.com represents its push into China, which has 457 million Internet users. Groupon is already popular in the U.S. as a promoter of group buying, a new form of e-commerce that is also taking off in China. Group buying works by featuring steep discounts on goods. Enough users, however, must buy into a deal in order for it to be offered to all who purchased it.

While Groupon has achieved success in the U.S., China's group buying market is already filled with domestic competitors. The country now has 4,015 such sites, all of different scope, with some focusing on certain cities, according to group-buying aggregator Tuan800.com, which offers an online portal to group-buying sites.

In its effort to enter the Chinese market, Groupon has partnered with Tencent, one of the country's largest Internet firms. The company is known for operating China's most popular instant-messaging client, along with being a major provider of online gaming.

So far GaoPeng rivals some of the most popular Chinese group buying sites in terms of user visits, said Hu Chen, a co-founder of Tuan800.com. But GaoPeng only generated about $289,000 in sales for the first two weeks it first began offering discounts in mid-March. This pales in comparison to $15.2 million in sales made by Lashou.com, China's largest group buying site by market share.

"The situation with GaoPeng and its customers is a lot of people view the site, but few people buy from it," Hu said. "In the month GaoPeng has been operating in China, the site has yet to acclimate to the market."

GaoPeng.com first started offering deals in Beijing and Shanghai, with the eventual goal of moving on to other major cities. The site first tried to attract a following in part by awarding Apple iPhones to users who registered as followers on its microblogs. The site has also offered a wide range of deals such as offers for restaurants, dance classes and even DNA testing for children to protect their health.

"Ever since GaoPeng went online, the site has constantly been trying to cater to users' demands," said Chen Shousong, an analyst with Beijing-based research firm Analysys International. "But in the short term, it has been hard for it to become a leader in the market."

GaoPeng was contacted for this article, but did not immediately offer comment.