Even though 55Tuan is China’s fifth-largest daily deals site, according to 2012’s third quarter data, it’s CEO, Xu Maodong, claimed recently that his company is the first in China to turn a profit, an achievement that will occur for its operations in December.
With China seeing a huge variety of Groupon clones, very few daily deals sites have been successful in the busy Chinese market. As of December 25, Maodong says the company brought in a profit of millions of RMB this month. It’s the first time the company has been able to pocket money since its launch in 2010.
The announcement that 55Tuan was refocusing away from just daily deals, earlier this year, to an all in one online platform seemed to give the company a spark. The strategy seemed to have worked; Maodong said that 55.com recently broke even.
55tuan, which operates in 130 cities and has roughly 10,000 merchant partners, isn’t the first to make the claim, though, as rival Manzuo asserted that it made a 1 RMB profit in September as noted by TheNextWeb.
Xu Maodong emphasized, in a recent article by TechInAsia that deals sites need to become online shopping malls if they’re to survive at all.
At the height of the daily deal boom China had over 6,000 participants in the business. Since then, thousands have folded. Even though a huge chunk of the start ups are still in business, the market continues to favor a few key players. The top five in terms of market share are Meituan, Dianping, Nuomi, Lashou, and 55Tuan.
Groupon itself tried to make a play for China, but it had trouble competing with the cutthroat margins set by its domestic clones. It ended up merging with rival FTuan, which was backed by its local partner Tencent, according to TheNextWeb.