Retailers shift their ad spending from TV, radio and print ads to digital ads.
The daily deal company will have a minority stake in the new company.
GaoPeng, the China-based daily deal site operated by Groupon Inc. as a joint venture, will merge with one of its competitors, FTuan.
Groupon will own a minority stake in the new company, as it did with GaoPeng, says a spokeswoman for the Chicago-based daily deal operator. She did not disclose terms of the deal.
The companies say senior executives from both deal operators will make up the management team of the new company, with FTuan CEO Lin Ning taking over as CEO of the new company. The companies decline to offer specific details about who will make up the remainder of the executive team. The company will also continue to operate Gaopeng and FTuan as separate brands after the merger is complete.
Groupon launched GaoPeng.com last year as a joint venture with Tencent Collaboration Fund and Yunfeng Capital. The Tencent Collaboration Fund is an offshoot of Tencent Holdings Ltd., one of the largest Internet service providers in China. FTuan, which focuses on lifestyle-focused offers, is also backed by Tencent Holdings.
“China’s daily deals market is moving from investment-driven to operation-focused, and I believe the merger will position us well to further scale our operations and deliver innovative products to our customers,” Ninig says. “The multi-brand strategy after the merger will enable the new company to serve the segment needs of merchants and consumers in lifestyle e-commerce and mobile Internet.”
Tencent Holdings is increasingly focused on e-commerce. Company chairman Ma Huateng said in May the company plans to invest $1 billion in its e-commerce subsidiary Tencent E-Commerce Holding Co. and is on the lookout for potential investments in emerging e-commerce companies. In addition to its daily deal ventures, Tencent operates the news and information portal QQ.com, an instant messaging service, the SoSo.com search engine, the trading portal Paipai.com and online payment service Tenpay, and develops online games.
“We believe group-buying is a natural leverage off our large user base, and an attractive offering that enhances the value of our e-commerce platform to online shoppers in China,” says Wu Xiaoguang, CEO of Tencent E-Commerce.
E-commerce is growing rapidly in China. Forrester Research Inc. estimates online sales will grow 27% a year from 2010 to 2015, reaching $159.4 billion by 2015.