Companies

Groupon: Gaopeng margins 'greater' than 10%

(Agencies)
Updated: 2011-06-10 15:17

Groupon Inc, owner of the biggest coupon website, said its China venture is achieving margins "much greater" than 10 percent even with competition from thousands of clones in the world's largest Internet market, Bloomberg reported Friday.

Since establishing the Gaopeng venture in February, the site is now offering deals in 30 cities and has established operations in a total of 50, Ouyang Yun, chief operating officer, said at a press conference in Beijing today. Groupon started Gaopeng.com this year with partners including Tencent Holdings Ltd.

Related readings:  Tencent shares rally on group-buying website venture  Confused bid at Groupon's China site  Groupon files for highly anticipated IPO  Greasing the brave new market's skids

Groupon, seeking to raise $750 million in an initial public offering, is "making progress" in China, Chief Executive Officer Andrew Mason said at the same event. Sales of Web discount vouchers for services such as dining and spas may quadruple in the Asian country in 2011, according to research company iResearch.

"Tencent's scale and user base gives Groupon an advantage, and China's group-buying market is still at an early stage and has a lot of upside," said April Su, an analyst at iResearch in Beijing. A main competitor for Groupon will be Alibaba Group Holding Ltd, she said.

Groupon, based in Chicago, promotes discounts on everything from meals to massages in the cities where its customers live. The company asked six more banks to help underwrite the sale, including Barclays Plc and JPMorgan Chase & Co, said two people with knowledge of the situation yesterday.

More than 3,000 group-buying websites operate in China and generated an estimated 1.5 billion yuan ($232 million) of sales in 2010, Su said. Revenue in the industry may quadruple this year, she said.

Alibaba operates group-buying site Ju Hua Suan. In April, Lashou.com, a Beijing- based group-buying site, said it raised $110 million of funding from investors including Milestone Capital and Cie Financiere Richemont SA's Reinet Fund.

Gaopeng.com, owned by a venture between Groupon, Tencent, and Yunfeng Capital, a private equity fund co-founded by Alibaba’s chairman Jack Ma, is seeking an edge in China with "world-class brands," Ouyang said today.

The size of China's group-buying market is small compared with the online retail market, which expanded 75 percent last year to 461.1 billion yuan, according to iResearch's Su.

Alibaba's Taobao.com generated estimated sales of about 380 billion yuan in 2010, accounting for more than 80 percent of the online shopping market, according to Su.