BEIJING: The fledgling group buying market in China is set to undergo rapid consolidation, as intense competition and pressure on margins take their toll on a sector containing almost 3,000 competing platforms.

GaoPeng, a joint venture between Groupon and Tencent, has recently formed a holding company with FTuan, another service in which Tencent also boasts a major stake.

While retaining both the GaoPeng and FTuan brands and websites, it is hoped the new parent company, called GroupNet, will yield considerable benefits in terms of enhanced efficiency and savings.

"We believe that China's group buying market will see another round of shuffle, and market share will be held by a few market leaders soon," Lin Ning, CEO of GroupNet, told the China Daily.

The wider goal, Lin added, is to leverage FTuan's strengths in areas like restaurant vouchers and film tickets, and GaoPeng's advantages on product deals, and the know-how of its overseas parent.

Dataotuan, the research firm, reported that FTuan takes a 4.7% share of the daily deals market at present, with GaoPeng on 1.9%. Meituan is the category's biggest player, on 17.7%.

Meituan revealed that its revenues reached RMB422m in June, up from RMB360m in May. It also anticipates becoming profitable by the end of 2012, with margins currently standing at 8% to 10%.

"I've been thinking for the last two years about how to operate internet technologies in a company with low costs and high returns," said Wang Xing, Meituan's CEO.

"As our efficiency gets higher and the more information we collect, that's when we have an opportunity to influence the whole industry."

A study from Tuan800, another group buying portal, suggested there are 2,976 such sites in China, down by 38.9% year on year. It also predicted the five or so services will soon take 80% of the market.

"Before September, more websites will be looking for cooperation, due to low profit margins. But since many of them have similar resources but different sales systems and company cultures, whether their cooperation will generate a higher business value still remains in question," said Hu Chen, co-founder of Tuan800.

Figures from Analysys International the research firm, stated that group buying sales hit RMB23.7bn in 2011, with 1m offline retailers utilising this channel.

However,, a daily deals aggregator, estimated that values returns fell by 23% to RMB2.1bn in June month on month, while transaction volumes dropped by 26% to 38.4bn.

"Group buying websites have undergone great changes over the past six months, the number of websites has decreased by 40%," said Sun Haidi, deputy director, marketing, at

Data sourced from China Daily, Tech in Asia, CRI English; additional content by Warc staff