Chapter 523: Crisis of Trust

The entire eleven-day holiday saw Group-Buy steadily progressing in a healthy manner.

Hengtong Freight successfully established its first supply chain significantly reducing the subsidy costs for community group-buying while the joint effort of Alipay and Group-Buy reshaped the tourism landscape in first-tier cities.

However, the crisis that was bound to happen in the group-buying market still arrived.

On the final night of the October holiday Jiang Qin, shirtless, was drinking beer with three guys from his dorm, and Zhang Guangfa and Zuo Baiqiang from the next room over, enjoying small dishes delivered by Group-Buy.

Perhaps the most wonderful times in college life were moments like these.

Before they could even get tipsy, Wei Lanlan called Jiang Qin and read him a news bulletin.

“Tuobao Network suspected of financial chain break, customer service line unattended, owner might have fled.”

Hearing this title, Jiang Qin frowned and muttered indeed as the last market scramble left those unable to secure funding struggling.

“Old Jiang, what are you off to do?”

“Nothing, just carry on eating, don’t wait for me.”

Jiang Qin took the only meat dish on the table turning to his computer, ignoring the exquisite traditional arts behind him.

Tuobao Network was an early entrant in the group-buying market and initially grew rapidly, being the first to establish a member points system.

As of last August just prior to significant website financing, the company had reached 2300 employees with over 8 million members.

During the advertising war of 2009, he hired Daniel Wu and Qin Lan as spokespersons earlier than Lashou Network, producing commercials commonly seen on CCTV and satellite channels.

But in the third round, capital interest waned, slowing his growth.

Unbelievably, just one year later, the website faced financial discontinuity.

However, online news can be unreliable, which Jiang Qin knew while continuously searching for early news about Tuobao Network.

He then discovered that Tuobao Network had announced a layoff plan at the beginning of the year, cutting 50% of its workforce in one go.

The news had caused uproar, though it was quickly suppressed.

Leaders like Group-Buy, Public Comments, Lashou, Nuomi, and Wowo Network would only look forward, missing some updates from behind is usual.

No one expected Tuobao to end so tragically, going bankrupt.

What surprised Jiang Qin was not just their sudden bankruptcy; just three days before the closure, they had held a large discount campaign.

In other words, they aggressively sold their own discount coupons for cash, then disappeared.

When this got out, it blew up big.

Group-buying, previously hailed as the “era-changing” industry especially with Alipay and Group-Buy’s joint ventures suddenly faced scandal.

Following the outbreak, major media across the country started to follow suit.

Merchants collaborating with Tuobao Network, seeing the news, immediately declared unilateral termination of their partnerships, refusing to recognize the coupons from Tuobao.

Consumers found their coupons worthless, reduced to nothing more than strings of codes and a text message.

Enraged consumers quickly filled online forums.

“I stocked up on thirty supermarket vouchers, are they just trash now?”

“Damn it, I always said group-buying was a scam, so cheap, now I really got played!”

“Call the police, quickly!”

“Brothers, anyone on WeChat? I’ve created a rights-defending group; group ID below.”

“The government must give us an explanation for this!”

“What’s it have to do with the government?”

“If they allow such websites to operate, shouldn’t they tighten control? How can they just let them take off?”

“Reported to the police already, they said they’ll take up the case, asked us to wait for news.”

“I’m not just a consumer; I’m the owner of True Fruit Supermarket. It’s been three months, Tuobao Network hasn’t settled payments with me!”

“Same here, they still owe me over 800,000!”

“It’s done, they haven’t even paid the merchants. This site definitely ran off!”

Jiang Qin silently read the comments in the forum, his expression growing graver.

Just as he discussed in class with the old professor, the rapid and intense development of group-buying sites was bound to cool off eventually.

Sites like Group-Buy, with their stronger risk resistance, might not face major setbacks, but those already struggling would undoubtedly face financial breaks.

Yet, Tuobao Network’s actions were beyond Jiang Qin’s expectations.

They had sold off coupons and took the money just before shutting down, possibly affecting the whole group-buying industry’s reputation.

Now, purchasing coupons from other sites, everyone might worry whether they’ll be the next Tuobao Network.

“Old Jiang, you still drinking?”

“Not anymore, got business to handle.”

Jiang Qin raised a finger: “See this? With one press like this, swoosh, there are millions.”

After hearing that, Cao Guangyu crushed his can: “Damn, that’s some boasting.”

Zhang Guangfa, looking at Jiang Qin, felt the surreal sensation of sitting next to a billionaire, then burped: “I think what Jiang’s saying could be true.”

“Isn’t that obvious? Of course, it’s true!” Cao Guangyu banged the table.

“Then why say he’s showing off?”

“Because it’s true that I’m pissed off! If it were false, it wouldn’t even bother me.”

Jiang Qin chuckled then copied the WeChat group ID from the post and joined.

Many defenders had already joined, conversing in traditional arts in the group, their voices for rights undeniably strong; not even a racy image sent suddenly could interrupt their rants.

Then, major media also began to follow up, as news of group-buying websites suddenly running off spread across the net.

Even experts spoke up analyzing this phenomenon.

“The booming group-buying market itself was abnormal, such incidents aren’t surprising…”

“In industries burning through cash, if services aren’t upgraded and operations not managed well, financial breaks are just a matter of time.”

“In the future, more websites might face similar issues, consumers need to choose cautiously, not blindly chasing cheap deals.”

The expert’s words weren’t solely aimed at Tuobao, but targeted the entire group-buying industry, which undoubtedly alarmed consumers.

Therefore, in the following days, leading group-buying sites issued statements claiming sufficient funds, ensuring no mishaps would occur.

However, the seeds of doubt had been sown, and sometimes no amount of reassurance can address them; fraudsters don’t always start by telling you they’re deceitful.

Consequently, many who liked to stock up on coupons began to request refunds, even Group-Buy, constantly promoting its credibility, faced numerous cancellations.

These cancellation sums were massive, enough to potentially bankrupt a site as big as Lashou Network, leaving all group-buy sites somewhat anxious.

Got up at six to catch a flight, been rushing at the airport, will update more after landing, more tonight.