Will China’s group buy sites get their big break in online travel?
What challenges lie ahead for group buy leader and would be OTA-Meituan's crossover to travel from group buying?
Group buy leader Meituan is recruiting staff with backgrounds in attractions, travel agencies and OTA operations and showing ambition to break into travel distribution. What challenges lie ahead for its crossover to travel from group buying?
Survival of the fittest in the group buy sector
China's group buy sites mushroomed, and withered away, at equally astounding rates in the pioneering stage of the sector. Some 4,670 group buy websites had closed down as of June 2013, a failure rate of 75%, according to a China E-Commerce Research Center (CECRC) survey. By January 2014, only 213 group buy websites remained in China.
After five years of cutthroat competition, the group buy sector came of age and survivors had to diversify to stay afloat. Hence the inevitable cross over to the OTA sector.
Making the switch to online travel business
An experienced e-commerce expert said while Meituan’s hotel group buy operations has a large share of the economy hotels market that even surpasses Qunar, they have limited support from the hotel chains for online bookings. “Its formidable hotel operations is really only a thin slice of the segment that is dominated by Ctrip, and Meituan has neither the brand competitiveness nor strength to take on the big players yet,” he said.
Tourism College of Zhejiang's research director Qingbin Shi said that Meituan is a victim of its own prominence in the group buy sector for local lifestyle service. "If you think about it, would Meituan be the first site most people log on for travel products? If Meituan wants a firm foothold in the leisure travel market, then they need to offer original products on their platform instead of only selling last spots in other agents' tours.”
“Service is not a big component in Meituan’s current business scope. If they want to get into large-scale operation in outbound or domestic tourism, then they definitely need offline services like guides and drivers. Travel e-commerce sites must boost service in addition to enriching their product lines if they want to be successful,” Mr. Shi said.
Beefing up forces for the showdown
Meituan’s recently launched a recruitment campaign stating that applicants with over three years job experience in the travel industry or attractions are preferred.
“I heard about Meituan’s recruitment drive,” Mr. Shi said. “I think it’s beefing up its troops to break into the OTA market.”
A Meituan employee said Meituan wants to intensively cultivate its hotel operations from group buy to bookings. "To that end, our hotel team from the Hangzhou branch has gone independent and started recruitment this year. As we are already leaders in the hotel group buy sector, it makes sense for us to branch out into other segments as well,” he said.
With its reinforcements, Meituan will strengthen its position in the four major segments of weekend trips, attraction passes, domestic tourism and overseas travel and become a force to reckon with offering content in top domestic tourism destinations.(Translation by David)