---
title: "2021: Is 'Selling Groceries' Still a Good Business?"
description: "As the tide recedes, it leaves behind a field of vegetable leaves. The battle in the lower-tier market is always fierce, and 'selling groceries' has become the loudest battle this year. Since the beginning of this year, community group buying players have been divided into two major camps: on one hand, internet giants like Meituan, Pinduoduo, JD.com, and Didi have almost all-in on selling groceries to explore long-tail traffic; on the other hand, players who have been rooted in this track for years, such as Shihuituan, Tongcheng Life, and Xingsheng Youxuan, have successively announced new rounds of financing."
author: "曾乐"
publisher: "New Distribution"
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published: "2021-01-05"
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# 2021: Is 'Selling Groceries' Still a Good Business?

> As the tide recedes, it leaves behind a field of vegetable leaves. The battle in the lower-tier market is always fierce, and 'selling groceries' has become the loudest battle this year. Since the beginning of this year, community group buying players have been divided into two major camps: on one hand, internet giants like Meituan, Pinduoduo, JD.com, and Didi have almost all-in on selling groceries to explore long-tail traffic; on the other hand, players who have been rooted in this track for years, such as Shihuituan, Tongcheng Life, and Xingsheng Youxuan, have successively announced new rounds of financing.

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**As the tide recedes, it leaves behind a field of vegetable leaves.**
The battle in the lower-tier market is always particularly fierce, and 'selling groceries' has become the loudest battle this year.
Since the beginning of this year, community group buying players have been divided into two major camps: on one hand, internet giants like Meituan, Pinduoduo, JD.com, and Didi have almost all-in on selling groceries to explore long-tail traffic; on the other hand, players who have been rooted in this track for years, such as Shihuituan, Tongcheng Life, and Xingsheng Youxuan, have successively announced new rounds of financing, with giants like Alibaba and Tencent behind them.
The intensity of the battle goes far beyond this.
According to Tianyancha information, incomplete statistics show that there are nearly 200 enterprises in mainland China involved in community group buying and community fresh food related businesses; geographically, Beijing has the most, accounting for 14% of the total.
The massive 'grocery selling movement' is expanding rapidly, and the employment opportunities of small vendors may be impacted. In response, the People's Daily published an article saying: 'Don't just focus on the traffic of a few cabbages and a few pounds of fruit.'
'Community group buying is just taking away some existing cakes, not really making the cake bigger,' lamented an industry expert who declined to be named. 'Previously, everyone was thinking about how to make the cake bigger, but now everyone is vying to be the 'knife' that cuts the cake.'
**-01-**
**A Trillion-Yuan Market Ocean**
How big is the 'vegetable basket' business?
According to the National Statistical Yearbook, in 2018, the transaction volume of major fresh food stalls in China reached 1.5 trillion yuan. The main circulation channels are still farmers' markets and supermarkets, with low online penetration.
Liu Kai, vice chairman of Shihuituan, once predicted that the future community group buying market size will reach the trillion-yuan level.
Since this year, this track has received high attention and intensive capital injection.
According to Qichacha information, as of December 16 this year, there were 19 publicly disclosed financing events in community group buying in 2020, with a total financing amount of 17.17 billion yuan, a year-on-year increase of 356.3%, setting a new financing record.
Among them, many community group buying 'veterans' have achieved remarkable results this year: Shihuituan, invested by Alibaba, received 4 rounds of financing this year; Xingsheng Youxuan, backed by Tencent and JD.com, received 2 rounds of financing this year; Tongcheng Life, under Tongcheng Group, not only received 2 rounds of financing but also acquired the community group buying platform Linlinyi.
From the perspective of financing rounds, in 2020, there were 7 financing events above Series C for community group buying enterprises, and the financing process of leading enterprises in this track has basically reached the halfway point. After multiple rounds of reshuffling, players such as Shihuituan, Xingsheng Youxuan, and Tongcheng Life have all crossed the mountain of Series C financing.
'Fresh food is a trillion-yuan industry, and every household cannot do without it every day,' said an industry investor. 'Community group buying, as a new model, will improve the efficiency and effectiveness of the industry and bring more benefits to users.' This is why many capitals are increasing their bets on this track.
Internet giants are also full of energy for 'selling groceries.'
Earlier, Didi CEO Cheng Wei was reported to have said at an internal meeting that Didi's investment in Orange Heart Youxuan has no upper limit, and they will go all out to win the first place in the market; at the end of November this year, JD.com CEO Liu Qiangdong claimed that he would personally lead JD.com to fight this battle of community group buying; in addition, Meituan CEO Wang Xing has also repeatedly expressed his determination to win the community group buying battle at senior management meetings.
In this track, internet giants such as Meituan, Pinduoduo, Didi, Alibaba, and JD.com are concentrating their forces to seize the same cake.
**-02-**
**Accelerating to Seize the Opportunity**
Six years ago, community group buying was just a story that started in Changsha. Now, community group buying, which became popular locally, has begun to blossom across the country and quickly evolved into a massive nationwide 'community grocery revolution.'
Looking at the business models of the entire fresh food e-commerce industry, the community group buying model can significantly reduce circulation costs and further penetrate lower-tier markets, making it the most promising track with the shortest profit cycle.
'Compared with the problems of high fulfillment and delivery costs and inventory costs faced by the front warehouse model, the relatively lighter community group buying model can achieve greater profit space,' said Yang Liang, assistant analyst at EqualOcean.
Based on social interaction, community group buying relies on communities and 'team leader' resources to achieve commodity circulation. Its essential logic, as many industry insiders say, is: 'It starts with team leaders and ends with the supply chain.'
A grocery selling movement ignited by internet giants has kept team leaders extremely busy.
'Each order can generally earn 5 yuan to dozens of yuan.' Since becoming a team leader, employee Zhang Ting (pseudonym) has summarized an experience: each order earns little, so it needs to win by volume.
But what makes her anxious is: 'The competition is too fierce now. The money I've earned in these few months is not enough for my own expenses.'
'Many people around me are doing this, and I feel I can try it too. This job is not complicated, just a bit tedious.' With the mentality of earning more money, Wang Jun (pseudonym), who already ran a convenience store, joined 3 community group buying platforms at once, and his store also became a pickup point.
At first, users would also visit Wang Jun's convenience store when picking up goods. 'I was very happy at that time. More people came to the store, and I felt I made the right choice.'
But troubles soon appeared. Some products had quality issues, and Wang Jun had to handle after-sales. And because he couldn't take care of the store business, his store income decreased by more than half in a month.
He began to waver: 'The commission as a team leader didn't earn much money. Many things in community group buying are too cheap, and the product variety is richer. Few people want to come to my store to buy the same things.'
Behind the tug-of-war among team leaders is the mutual game among major community group buying platforms.
Because all players use fresh food as a traffic-generating explosive product to attack the lower-tier market, this intensifies the high homogeneity of competition in community group buying. In the highly compressed cost space, most industry platforms generally control the team leader's commission at around 10%, but this cannot strengthen the platform's control over team leaders.
Once a team leader's sales growth is unbalanced, they are very likely to 'defect.' This means players need to think of every possible way to retain team leaders.
As a result, subsidy investment battles and team leader grabbing battles continue to be staged, and this smokeless battlefield is intensifying.
'At the most exaggerated time, more than a dozen platforms were looking for me to be their 'team leader,'' Tang Yan (pseudonym), a full-time housewife in Wuhan, told EqualOcean.
**-03-**
**The Winner Is Still Undecided**
'The endgame of community group buying is just four words - unpredictable.'
Recently, at the 2020 Online New Economy Salon hosted by EqualOcean, Liu Xin, co-founder of Tongcheng Capital, said that community group buying itself has too many variables, and multiple complex factors produce the current business format. 'Overall, long-term development is unpredictable; in the short term, it is a very fierce battle.'
From the perspective of the competitive landscape, the entire track has gradually evolved from the original leading players such as Xingsheng Youxuan, Shihuituan, Tongcheng Life, Shixianghui, and Meijia into a fierce competition among internet giants.
Specifically, Tencent and JD.com chose to bet on 'Xingsheng Youxuan'; Alibaba not only has 'Yizhan Group Buying' but also entered 'Shihuituan'; Didi launched the community group buying business 'Orange Heart Youxuan'; Meituan established 'Meituan Youxuan'; Pinduoduo launched 'Duoduo Maicai'; Tongcheng Travel incubated 'Tongcheng Life,' etc.
In this regard, based on the SPC model and by comparing the community group buying competitiveness of the current 6 major internet giants, the EqualOcean Think Tank believes that the current players' focus is on customer and operational capabilities, and Meituan and Pinduoduo are relatively strong, and the leader may emerge from them.
Specifically, the competitive advantages of multiple players are different. At present, Meituan, which has achieved simultaneous development of multiple businesses such as flash purchase, grocery shopping, and Youxuan, has been able to expand rapidly in the community group buying battlefield, thus occupying a certain advantage in strategy and values.
With its unique traffic strategy, Pinduoduo has long planted its flag 'outside the Fifth Ring Road' and achieved many results in the lower-tier market.
In addition, Didi, JD.com, Hema, and Tongcheng Life are also constantly approaching the leadership field of community group buying.
In this seemingly easy-to-copy game of community group buying, players still face considerable challenges to achieve sustainable development. In essence, community group buying is still retail, and players ultimately need to break through difficulties in supply chain, operations, warehousing and distribution, and product quality.
In this regard, Zhang Bing, founder of Jiuye, believes: 'In the long run, community group buying has two core links: procurement-side supply chain and supply chain logistics. Among them, the most core thing on the procurement side is quality, and the logistics side is related to both delivery costs and delivery service experience.'
Just as the internet giants were in the midst of a fierce battle, the direction of community group buying suddenly changed.
After the People's Daily published its article, on December 22, the State Administration for Market Regulation and the Ministry of Commerce jointly interviewed Alibaba, Tencent, JD.com, Meituan, Pinduoduo, and Didi, and proposed 'nine prohibitions' for community group buying business operations.
Among them, the 'nine prohibitions' require internet platform companies not to abuse autonomous pricing rights through low-price dumping, price collusion, price gouging, price fraud, etc.; not to abuse autonomous pricing rights; not to use data advantages to 'kill the familiar' (price discrimination against existing customers), etc.
In this high-profile grocery selling movement, players need to have more reverence for the market and let consumers truly benefit.
**-04-**
**Epilogue**
Community group buying is a game that requires a good grasp of boundaries because it concerns the people's livelihood 'vegetable basket.'
Well-known media person Bai Yansong said: 'Low-priced community group buying seems to make consumers take advantage, but internet companies are wealthy, and in the price subsidy war, small vendors will soon lose. For the fresh food market that is still at the forefront, perhaps slowing down and having a cold think is an urgent matter.'
In Yang Liang's view, community group buying is a business format with an advantageous model. It will continue to develop next year and will eventually fall to the competition of enterprises' refined operational capabilities.
'As long as community group buying players grasp the symbiotic ecology with the traditional consumption chain, there is still a lot of room for development,' said an industry insider.
After experiencing many brutal battles such as O2O group buying, food delivery, and online ride-hailing, China's internet is time to say goodbye to barbaric growth.
With e-commerce accelerating its 'erosion' of offline commerce, the typical internet approach of rapid expansion through burning subsidies may no longer work. Players need to abandon the barbaric pioneering model, curb irrational capital impulses, and promote the industry onto a path of healthy competition in seeking the optimal solution.
Otherwise, when the tide recedes, most companies will not be able to retreat unscathed.
Source: EqualOcean (ID: i-yiou), Author: Zeng Le
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