Society

Group-buying companies find trust is not for sale

By He Na (China Daily)
Updated: 2011-05-16 07:36

A scandle at Gaopeng.com, a group-buying website, has aroused debate on whether or how to regulate online markets. Provided to China Daily

Some suggestions

"Seen as a business with great potential, it's inevitable that group-buying websites met with various kinds of problems," said Feng Xiaohai, CEO of the popular group-buying website Manzuo.com. Feng mentioned "vicious competition", expansion to new locations, recruiting people without a specific plan and "rampant poaching" of more capable employees from other companies.

The business model is easily copied, he said. Anyone can establish a group-buying website without demonstrating financial strength to carry out business properly or to guarantee its products and services.

"It would be helpful for the industry to introduce a credibility rating system, but the evaluation process must be fair and transparent," Ftuan's CEO Lin said. "It must be enforced by authoritative institutes, departments or staff."

"Raising the industry entry threshold and introducing a deposit for compensation costs are considered to be effective ways to regulate the industry and protect consumers' rights," Zhou said.

But three group-buying CEOs - Feng, Lin and Wu Bo, CEO of Lashou.com - are not sure how feasible such measures would be.

So much information is released online every day that it's hard for administrators to check whether it is true, Lin said. "I think self-discipline is a better way to regulate the industry since most of the large group-buying websites with strong financial support have hardly any financial conflict.

"We attach great importance to credibility and set out strict requirements in selecting cooperating traders. We even provide a refund service to consumers without adequate proof to minimize complaints."

Feng said, "I do not agree about raising the industry threshold, for it may hinder the enthusiasm of young people's enterprising spirit. After one year's development, it is the right time for the industry to be shuffled based on the laws of economics. Eventually, only a few websites with high credibility, the best service and strong financial support will survive."

One affects all

"I've had enough of big promises and little action by some group-buying websites," said Fang Detao, who ordered a coupon for dinner through a group-buying operation. "The portions of meat, fish and vegetables were all at least half of their usual quantity. The meal was not worth the money I paid, and it embarrassed me in front of my friends."

"Many consumers take group-buying websites as a whole body," Wu said, "so once they have been cheated or have had an unhappy experience, they will lose trust in all the group-buying websites." It is necessary, he said, to call for serious punishment of illegal acts.

"The essence of group-buying is to satisfy the marketing demands of local sellers and to provide goods and services with superior quality and attractive prices," Wu said. "I suggest that consumers choose big group-buying websites with high credibility and a sound refund system." Those attributes provide better recourse to consumers when conflicts develop, he said.

Looking ahead

"I have great confidence in China's group-buying industry," Ftuan.com's Lin said. "People's reliance on group-buying will become a must-do in their daily lives."

Survival in the rapidly expanding model relies on raising the quality of service, he said. "Meanwhile, don't always pattern yourself on others, but make something your own. We have a special staff to investigate the market so we can develop new service methods."

Lashou.com's Wu also is optimistic about the future of the group-buying industry. "We have 4,500 members on our work team, and our service has already extended to 150 first- and second-tier cities. We plan to continue our expansion and to hit 500 cities by the end of this year."

Manzuo.com's Feng said, "The war of low prices will finally corner all the players, so differentiated marketing is needed. So far, among all the group-buying items, food and beverages still account for a high proportion. But in the long run, Manzuo.com will introduce more items in the realm of culture, literature and art, like concert, opera and drama."