Ganji.com repudiates rumors about shutdown

Beijing-based classifieds website ganji.com said on Monday it has enough capital to remain in operation for at least three years, rebutting claims that the portal is on the verge of shutdown and that it will start large-scale downsizing this week as it faces a tight budget.

"Ganji will not change its plan to spend $10 million on advertising and $20 million on vacation rental service in 2012," He Yunfeng, public relations director at the company, said in a statement to the Global Times yesterday.

It will be clear in two to three years "whether Ganji is a promising company or not," Ganji's founder and CEO Yang Haoyong wrote on his Sina Weibo Sunday night.

"The website covers a wide range of classifieds, including employment, house renting, catering and housekeeping, which has a big market potential," You Tianyu, an analyst at Beijing-based market consulting firm iResearch, told the Global Times yesterday.

However, classifieds portals like Ganji have not seen any profits so far. The profitability and growth speed of the sector is not as good as expected, said You of iResearch.

Compared with vertical information providers such as dianping.com in the catering industry, companies are less willing to pay for advertising on classifieds sites, which need to further enhance their user stickiness, according to You.

Ganji recorded relatively low earnings yet high costs, so it needs to control expenses and explore a profitable business model, Lu Zhenwang, an e-commerce analyst, told the Global Times yesterday.

Ganji's scope of business is too wide and it needs to find a focus, said Lu.

Classifieds information websites have opportunities in online-to-offline (O2O) business, which involves paying online for offline services, Lu noted.

Ganji entered the group- buying sector, a typical O2O model, last March. And chief executive Yang said last December that the company's monthly transaction volume had reached tens of millions of yuan and that it would make profits within three months.

58.com, the biggest rival of ganji, has been involved in the group-buying sector since the beginning of 2011 and was ranked seventh among group-buying websites last year in terms of sales revenue, according to tuan800.com, a group-buying portal.

Ganji also began the trial of new O2O service last November with the launch of its short-term accommodation service mayi.com and transferred some of its group-buying staff to the new business early this month.

"Classifieds sites have advantages in O2O field, which focuses on providing comprehensive life services information to the public," You from iResearch said, adding that the O2O model can be used to include more services such as auto rental and housekeeping.