Gaopeng.com, the Chinese joint venture of US firm Groupon Inc, laid off more than 30 percent of the employees at its Shanghai branch, partly as a result of intensifying competition in the group-buying industry in China, IT experts told the Global Times Sunday.
"I was sacked on Friday afternoon together with 50 other writers in the editorial department," a 28-year-old female writer who wished to remain anonymous told the Global Times Sunday.
According to the former employee, more than 150 people have been laid off in the last two weeks.
"The reason they offered is that the company is not making money and it can't survive without letting us go," she said.
Calls to Wang Yicheng, sales director of Gaopeng's Beijing branch, went unanswered Sunday.
Gaopeng has been in the red since it entered the China market in March.
"In fact no group-buying website in China is making money," Su Huiyan, an e-commerce analyst at iResearch, told the Global Times Sunday. "However, Gaopeng's problem lies in its inadequate revenue."
Gaopeng stopped advertising with Google and Baidu recently, but according to statistics from consulting firm Marbridge, the company used to spend 15 million yuan each month ($2.34 million) on advertising with the two websites.
According to the former employee, Gaopeng's sales are much lower than its main competitors.
"Normally for a movie ticket and a restaurant meal, other group-buying websites can sell tens of thousands of orders for a deal. We could only sell up to 1,500 at most," the writer told the Global Times. "I think our salespeople didn't get good bargains with the vendors."
Others said internal chaos at the company was to blame.
"The fast expansion has caused flaws in the company's internal management," Hong Bo, an IT expert, told the Global Times Sunday.
"The competition among group-buying websites in China is like a marathon race. This layoff signals that we are entering the knockout stage where only the best players can survive," said Hong.