Is Groupon a Joke?

What went wrong for Groupon in China?

In August 2011, a wave of layoffs swept Gaopeng.com — Groupon's Chinese joint venture with internet giant Tencent, launched just six months earlier amid ambitions to dominate China's group-buying market. Staff were "leaving the company almost every week," a mid-level employee told the 21st Century Business Herald, and a former Beijing staffer vented under the alias "Gaopengbuxingle" — Gaopeng will fail — on Sina's microblogging platform. Up to 30 percent of employees were reportedly cut, many of them contract workers terminated after probation.

Gaopeng's chief operating officer, Ouyang Yun, insisted the company was merely "experiencing a reshuffling of personnel" and had dismissed employees only for poor performance. But the numbers told a different story: Gaopeng drew about 1.71 million daily visits while competitor Lashou.com drew 6 million — and Lashou ranked only eighth in the market.

Why couldn't Groupon win in China?

China's group-buying ("tuan gou") market was a knife fight — thousands of clones, ferocious local competition, and a business that analysts said was about service quality, not deals. Gaopeng was a latecomer backed by Groupon's global playbook and Tencent's local knowledge, with investors including Yunfeng Capital, the fund co-founded by Alibaba's Jack Ma. But money couldn't buy what mattered: merchant vetting, reliable fulfillment, and customer trust. Complaints piled up — one Shanghai customer waited two weeks in vain for a box of peaches from a Gaopeng-recommended vendor.

Meanwhile, incumbents like Dianping.com, China's largest dining review site, moved into group purchasing with an existing user base and deep merchant relationships — advantages no amount of venture capital could replicate overnight.

What did the debacle reveal?

Gaopeng's implosion was part of a larger story: the global group-buying bubble deflating in real time. Groupon itself would IPO later in 2011 at a fraction of the valuation it had once commanded, and the "clone the model, add local flavor" strategy kept failing wherever local execution mattered more than the brand. The joke, if there was one, wasn't on Groupon alone — it was on the idea that a business model could be airlifted across markets without understanding them.