Thor suggested that websites offer deals more frequently instead of "one deal one day" to attract customers whose interests vary. "They may not come again if they find nothing they want to buy after several visits," he said.

Shen said competition in big cities such as Beijing and Shanghai will remain a game for few, but small websites focusing on a niche market, such as home furnishings and cosmetics, or market of second- and third-tier cities will have a chance to survive.

Be creative

A couple of differences between U.S. and Chinese business cultures make it difficult to replicate Groupon's success in China, Thor said.

"New companies in the United States generally prefer establishing a business model of their own rather than being a copy cat, though it's much easier to replicate other's ideas," he said.

And Groupon had already attained excellence at service details such as user experience and after-sale service, before others found group buying could be a gold mine, he said.

Nuomi.com and Manzuo.com had several creative tries to surprise customers. On September 1, Nuomi.com offered a nearly 60 percent discount for one-year subscription of CBN Weekly at 199 yuan ($29), and the three-day deal attracted 7,313 buyers.

Yi Xianfeng, Executive Editor in Chief of CBN Weekly, said it was "one of his happiest moments working at the business weekly magazine," and the deal was "a good example of smart marketing."

Of the total number, 90 percent are first-time subscribers attracted by Nuomi's promotion at social networking sites Renren.com and Mop.com.

"We always complain that the young generation gives up traditional publications, but nuomi.com helped us reach them through an introduction written in their language," Yi said.

Manzuo.com turned a former Beijing cinema into its namesake theater on September 8. The website had partnered with the cinema in Beijing's bustling Xisi area to sell tickets to group purchasers for months, and will continue to do so in the future.

KPCB China, a fund between U.S. venture capital KPCB and China-based TDF Capital, recently confirmed that they had injected an investment of $10 million into Manzuo.com. KPCB China partner Zhou Wei said they chose Manzuo.com because of its capable executive team.

"We pursue no hot concepts. We value whether the team of a startup company is capable of tackling the huge market potential, whether they understand the essence of the business model and exhibit execution excellence," Zhou said.

The TOOCLE report said about 96 percent of nearly 200 respondent group buying websites said they are looking for fund-raising opportunities, and 12 percent of the 96 percent have secured investments at varied amounts.

On September 9, Mercedes Benz offered 30 percent discounts for Smart cars on the group buying site of Taobao.com and sold 205 cars in three hours, a rare promotion for both the car maker and the platform. Before that, most of deals the website offered were home appliances, food and clothes.

Honest and standard practice

When many websites set out expanding their footprint in more cities, it creates enormous pressure for them to land more quality deals and deliver satisfying after-sale services.

The local market watchdog Beijing Administration for Industry and Commerce received 21 group buying complaints in August, mainly about goods delivery and return problems, price cheating and product or service inconsistency.

Nuomi.com, for instance, may suffer a loss of 500,000 yuan ($73,530) because of its failure to guarantee the interests of its customers.

One of its clients, the owner of Game Park in Beijing, closed down the shop and ran away with money from online sales of game coins before the contract expires. Nuomi.com promised to make compensations to all the buyers of the deal. Similar cases have happened to some of its peers, bringing to the surface a new version of reservation consumption crime taking advantage of group buying platforms.

While negotiating a deal, websites should also take into consideration clients' accommodation capacity, in addition to their credit and quality of products or services, Zhao said.

"There is always a decent price for any product or service," he said. "Customers should beware of fake products or false promotions at unreasonably high discount rates."

Government departments are moving to address growing group buying complaints. TOOCLE recently introduced non-compulsory certification and rating services for online group buying businesses.

"We aim to help customers identify trustworthy websites and encourage honest, standard practices for the market," said Zhang Ge, head of e-commerce credit platform at TOOCLE.

Other institutions such as the Ministry of Industry and Information Technology, the State Administration for Industry and Commerce, the central bank and the State Administration of Taxation are working on relevant measures to regulate the market too.

"The market will improve and websites without ICP licenses or sound payment solutions will soon fail," said Feng Xiaohai, founder of Manzuo.com.

More than 100 group buying websites formed an alliance and swore to honest business practices at the first industrial summit in Hangzhou, Zhejiang Province, on September 19. TOOCLE, as the alliance initiator and summit organizer, released its group buying report at the summit.