Friday, November 19, 2010

Qihan Li: Tech Watch


Starting from this week’s column, I will introduce up and coming or already popular but somewhat unknown websites and companies from China and America with similar backgrounds or business models to you, the readers, so that you will have a better grasp of the latest trends.  For this week, I will introduce the flash-deal websites that sell products at discounted prices for a short period of time. Companies with such business models like Livingsocial and Vipshop have exploded in both China and America over the past few years and both companies represent a larger trend in their respective nations.

Livingsocial.com

There have been serious rumors around the web that Amazon will invest 100 million dollars in LivingSocial to expand their share of the special-deals and coupons market.  LivingSocial primarily focuses on discounted experiences for bars, salons, and various forms of entertainment in the local area, and the discounts range from 50-80%.  You have probably seen its applications like Visual Bookshelf on Facebook. Due to the economies of scale, it has rapidly expanded to nearly 90 markets and it directly works with local businesses.  They get a share of the businesses’ revenues, and the discounts indirectly advertise the business. Despite fierce competition from large websites like Groupon as well as another 180 smaller websites, LivingSocial has been projected to rapidly expand in America.

Vipshop.com

In China, one-deal-a-day websites are generally not as popular as websites that combine the traditional e-commerce model with limited time and huge discounts.  One example is Vipshop, which recently raised 20 million dollars from venture capital firms DCM and Sequoia.  Vipshop sells middle-tier brand-name clothes and accessories to cities in China and directly works with both international and domestic retailers to increase the discounts.  What separates it apart from competitors may be its wide variety of products and its secured and trustworthy retail chain. Chinese customers always have to worry about fake products, but Vipshop generally eliminates such concerns with its 7-day return policy and the guarantee of China United Insurance. Vipshop has set its eyes on the growing middle-class to increase its sales and offers valuable opportunities to foreign brands to enter the Chinese market. However, with the flash-sale market rapidly expanding, Vipshop has to continue to innovate to stay at the forefront.

Sources: Sina, Venturebeat, Wall Street Journal, Wikipedia. 

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