China's Groupon Clone Files For $100M US IPO
China's leading daily-deals website Lashou Group plans to raise up to $100 million in an initial public offering on the Nasdaq to expand its marketing efforts and delivery systems, according to a filing to the stock exchange.
Lashou, which was launched in March 2010, operates in 500 cities or towns in China. Its business model is like Groupon Inc, where users buy discounted deals from merchants who have revenue-sharing agreements with Lashou.
China's group buying sector is intensely competitive and saturated with more than a thousand group buying websites and Lashou faces an uphill battle to win a lion's share, analysts say.
"E-commerce in China is hyper competitive, much more than the USA, and if any sector stands out as highest risk for lowest return, then it is group buying," said Michael Clendenin, managing director at Shanghai-based consultancy RedTech Advisors.
Groupon is also in the process of filing its books for its IPO to sell 30 million shares at $16 to 18 apiece. Groupon may raise its price range due to demand.
For the six months ended June 30, Lashou made a loss of $60.57 million. Lashou's sales and marketing expenditure rose from $6.2 million to $50.12 million in the first six months of 2011.
"The company is just barely two years old, burning cash on high marketing expenses and has some very strong long-term competitors in Taobao, Tencent and Renren," he added.
Gaopeng, Groupon's joint venture with Tencent Holdings in China, recently laid off staff and shut offices as part of what the company said was restructuring and a change in strategy.
Renren Inc operates social networking site Renren and Nuomi, a group buying website.
China's group buying industry was worth 2.79 billion yuan ($439 million) in transaction value in the second quarter, according to data from Beijing-based consultancy Analysys International.
Lashou had a marginal lead over China's number two player Meituan in terms of daily unique visitors.