Group Buy Site 24Quan Quits 团购网站24券关门
After taking a temporary “excursion” offline due to a dispute with its investors in October, mid-sized group buying site 24Quan has decided to make the trip permanent by closing down, in the latest wrinkle of a painful restructuring in the overcrowded space. This latest development shouldn’t come as a surprise to anyone, following the site’s suspension of service 3 months ago despite its promises to reopen once it resolved its problems. (previous post) Now it seems the company’s managers couldn’t resolve those differences with investors, prompting 24Quan’s CEO to confirm that his company has officially closed its doors permanently.
While none of this comes as a big surprise, what does surprise me a bit is that some other group buying sites are still alive as we head into the Year of the Snake, most notably former sector leader LaShou. I had previously predicted that LaShou and some of its major peers would in all likelihood be forced to either close or merge with rivals before the end of 2012. But that prediction was obviously premature, as many of those companies continue to sputter forward, though it’s unclear who is paying their bills these days.
Let’s take a look at the latest news from 24Quan, whose founder and CEO Du Yinan has said through his personal assistant that the company’s negotiations with its investors that began in October failed to produce any new agreements that could keep the site operating. (Chinese article) As a result, the company has officially closed down.
The report says that Du has formally given up all of his interest in the company, whose assets and other affairs are now in the hands of its investors. Du apparently tried to sell the company, but couldn’t find any buyers. In the end, some 300 remaining employees have lost their jobs, marking a quiet end for what was once a much larger company with big hopes for making big money in the group buying business in China. The fact that 24Quan couldn’t sell itself means that the handful of cash-rich potential buyers are most likely being very selective in who they purchase, since they have many choices among the many remaining companies that are probably tottering on the brink of insolvency.
We haven’t heard anything about LaShou for quite a while, but a check of the company’s website shows it is still operating. Its current homepage isn’t very exciting, consisting of a big list of the various cities across China where LaShou offers group buying discounts and links to individual pages for each of those cities.
Another former high flyer, Groupon.cn, which is no relation to the US group buying giant Groupon (Nasdaq: GRPN), was also still in business despite reports last year that it was flirting with closure. A visit to Groupon.cn’s site had the interesting addition of the word “new” to the company’s name, implying that perhaps it was able to find a new investor to keep funding its operations.
I don’t know what the financial situation is with either of these companies, but I do suspect that at least LaShou is still on the cusp of having close or merge with a rival due to a cash shortage. All that said, I do expect we’ll see LaShou and other former high flyers like 55tuan either merge with rivals or close shop by June, with the industry’s clean-up largely finished by the end of the first half of the year.
Bottom line: 24Quan’s official closure will be followed by more closures and sales of big-name group buying sites as the sector’s consolidation winds up in the first half of this year.
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