WITH group-purchase websites popping up all over China, three mechanical engineering juniors at Jiao Tong University's Minhang campus decided to cash in on the craze by opening a website called Siyuantuan.

In the space of a short three weeks, the new site has proven to be a hit by offering attractive deals on local goods and services geared to students, like restaurant meals, hair-styling, clothing and health products.

The founders, Li Feng, Yu Shuang and Huang Tianhui, report between 700 and 800 visitors a day on the site, with up to 7,000 clicks. There are already 1,000 registered users, who pay no fee to sign up. The Minhang campus has a student population of up to 40,000.

In early march, Siyuantuan - whose name refers to a Jiao Tong campus bulletin board site - offered a deal on sports shoes, with discounts averaging about 70 percent on shoes priced between 265 yuan (US$40) and 445 yuan. The offer was sold out, with 103 consumers signing up.

The group-buying model, initiated by Groupon Inc in Chicago about two years ago, works on the premise that a retailer will offer discounts of up to 70 percent on a meal, a movie, an outing, a massage or some other service. The offer is contingent on a minimum number of takers. There are more than an estimated 1,000 group-buying websites operating in China.

Operators of such websites typically make money by getting a rebate from vendors on products and services sold and in some cases by charging consumers registration fees.

Li, Yu and Huang are newcomers to the business game, but they have some pretty definite ideas about how to attract and keep customers.

"We mainly target students of the university, and we ensure high quality products, low prices, as well as good service," said Li.

The students try out goods and services before offering them online. The website also provides mobile phone numbers and dormitory addresses where complaints can be lodged directly with sellers. If a user is dissatisfied, money is refunded.

"It's important to win student trust," Yu explained.

When negotiating with local restaurants for discount offers, the trio insists the food served to coupon buyers is the same quality and quantity as that served to other customers. They also guarantee that coupon buyers won't be discriminated against in queuing for tables.

At hair salons, Li, Yu and Huang make sure that coupon redeemers aren't charged hidden fees.

Students tend to have faith in the vendors offering discounts because they are local businesses known to everyone, Li said.

The trio tries to keep in close contact with customers who have registered on the website, heeding any comments or suggestions. Students can also have discussions on the website and forward their requests for discount packages they would like to see.

Cost-conscious students are a natural fit with group-buying websites.

Liu Shuang, a student in the school of electronic information and engineering, bought a coupon for a haircut at 9 yuan instead of paying the 27 yuan he would have been charged as a regular customer walking through the door.

"It is very cheap, and I have no concern about being cheated," he said, "because the website is operated by my schoolmates."

His view was echoed by Zhang Yuchao, a student in the school of information security engineering.

"I pay only if I have received the products, which makes me feel safe," Zhang explained.
Li said he was first attracted to the potential of group buying, or tuangou, last July when the new shopping trend first started catching on in China.

He and his two partners started the construction of the website at the end of last year and opened it in late February. They invested 2,000 yuan of their own money, and distributed pamphlets on campus to tell people about the new service.

Li said he was hoping to gain some business experience from the venture and, at the same time, make a bit of money. Yu said she joined the venture to get some experience in the real world of commerce.

The website has yet to prove profitable, but Li said he's confident that it will eventually pay for itself and give those who run it a modest rate of return.

"We're off to a good start, and the website has such promising prospects," he said.

Li said the most immediate task is to build Siyuantuan into a popular and reliable website.

"We won't make a lot money from students," he said. "The major source of revenue will be rebates from vendors and possibly advertisements."

At this stage, with the website still in its initial stage, no rebates are charged. The trio is hoping to change that once the site is more established. Li said they have thus far refused requests for advertisers seeking space on the website.

"Students don't like all that commercial stuff," he said.

Part of the trio's strategy is to attune offerings to the campus world. The website recently offered a package for overnight accommodation at the Jinpeng Hotel near the university. A room for one night, which usually costs up to 228 yuan, was priced at just 99 yuan. The offer was sold out in two days.

The timing of the offer was tailored to coincide with doctoral degree examinations, which bring outside students to Minhang.

For International Women's Day on March 8, bamboo charcoal products - considered natural health gifts for women - were offered on the website. That was Yu's idea and it proved to be a popular one.

One of the newer offerings on the site is business-style clothing appropriate for students embarking on the job-hunt circuit.

It's been a steep learning curve for Siyuantuan's founders.

"At first, we didn't have the experience to realize that we needed to sign contracts with vendors," Li said. "We had to visit the businesses again and again to make sure the offers were still valid and everything was working as agreed. Now we make detailed proposals and contracts."

The team is quick to intervene when problems arise. For example, a student who bought a coupon for dinner at a restaurant was turned away at the door because the restaurant staff wasn't informed about the coupons. The student called Yu to complain, and she in turned phoned the restaurant owner to sort the matter out.

"We think communication is very important in operating the website," Yu said.

The team has set up a products distribution center on the campus, which alleviates the need for them to send or deliver most products to customers.

With heady ideas of expansion, the trio is trying to recruit more members to the team. Li, Yu and Huang said they are hoping to set up cooperative group-buying system linked with other universities.