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-01- Community Group Buying: A Trillion-Yuan Dream Is Not Far-Fetched According to multiple consulting agencies, the total GMV of the community group buying industry in 2020 was approximately 100 billion yuan. In early 2021, as some began to deliberately or inadvertently talk down community group buying, the news of Xingsheng's $3 billion financing round shook everyone in and around the track.

In 2020, giants entered quickly and progressed even faster. Within less than a year, under the leadership of top platforms, most city markets had planted the banner of community group buying. According to public data, Xingsheng, Chengxin, Meituan, and Duoduo have all launched city-opening plans on a considerable scale, covering 163, 251, 308, and 298 prefecture-level cities respectively.

Correspondingly, according to research data from securities institutions, the penetration rate of community group buying has risen from less than 5% to around 50%, with lower-tier markets showing higher penetration.

Moreover, with the entry of giants and rapid market education, platforms are no longer limited to fresh produce; the categories covered are expanding rapidly, with SKU counts on platforms growing from dozens to hundreds or even thousands.

After the fierce battles of 2020, the beginning of 2021 saw a wave of financing and IPOs in the community group buying track.

In 2021, community group buying is coming on strong. Cutting 20% of the total share of supermarkets (4.7 trillion yuan) may no longer be just a slogan; the industry's total GMV reaching 1 trillion yuan is not a dream.

-02- Consumption Scenarios Become Daily As a new business model that integrates traditional e-commerce and offline physical stores, community group buying currently holds a negligible share of the overall retail market (hundreds of billions). However, this purchasing scenario is being accepted by more and more users and will gradually become a routine consumption choice for about one-fifth of households.

In first-tier cities, the penetration rate of community group buying is mostly below 30%, with markets distributed beyond the Fifth Ring Road. In second- and third-tier lower-tier markets, the granularity is finer than in first-tier cities, with penetration reaching 45%. In fourth-, fifth-, and sixth-tier cities, penetration can be even higher, reaching over 50%, but correspondingly, distribution costs rise.

-03- Diversification of Purchasers As mentioned in a previous article, the typical community group buying purchaser profile is a housewife aged 25-55, with the core group being working-class and low-income earners.

In 2021, this boundary will be completely broken. Age, gender, and purchaser role will no longer be limited; community group buying will become the third basic scenario for household needs beyond physical stores and traditional e-commerce.

-04- Polarization of Group Leaders A: To the Right: Group Leaders Forced to Become Movers Recently, news spread on online social platforms that community group buying teams would undergo massive layoffs. Meanwhile, many employees within community group buying giants have revealed that core regional staff are replaced every 2-3 months, and even all job requirements and actual recruitment are at a 1:2 ratio. Coupled with a slowdown in city expansion, business function adjustments within the track may lead to large-scale reductions.

As for the long-debated question of whether group leaders will be discarded after their usefulness, once their private domain traffic is exhausted, more group leaders will directly perform only product delivery functions. At this point, the platform's profit-sharing system will iteratively self-adjust, and group leader commissions may drop from 10% to around 5%. This means that after two or three years of hard work, group leaders will ultimately become movers.

B: To the Left: My Territory, I Rule Facing the fate of becoming movers, the more thoughtful or foresighted younger group leaders refuse to be submissive. They are uniting to guard their private domain traffic, on one hand resisting the big platforms' tendency to burn bridges, and on the other hand directly cooperating with product suppliers to weaken or bypass mainstream community group buying e-commerce platforms, completely bypassing platforms to provide differentiated services directly to consumers.

In 2021, the voice of professional organizations like group alliances/group wholesalers, acting as arms dealers for product supply, will grow louder. The "group alliance—group leader—user" chain will form a differentiated business model.

-05- Goodbye to Secondary Distributors and B2B The price war sparked by community group buying has caused distress among distributors everywhere. The group buying model is similar to "factory direct sales," with platform prices even lower than distributor supply prices. Although later differentiation measures were taken, when the volume of community group buying is not yet large enough, manufacturers will not rashly develop new products. For secondary distributors, who have no pricing power at all, the impact of community group buying is a devastating blow.

As for B2B, community group buying is widely recognized in the industry as a pseudo-B2C platform—wearing the cloak of B2C while doing B2B business. More accurately, community group buying is essentially an online wholesale department. Additionally, compared to B2B's pure to-B model, community group buying's BC integrated operation is more thorough, allowing both wholesale and retail. Therefore, B2B is in an awkward position and will face the institutional demise of the entire industry, completing its historical mission.

-06- Chain Supermarkets and New Store Commerce Embrace Group Buying For chain supermarkets, the emergence of community group buying was initially like flies buzzing around their ears—annoying but not harmful. However, when these flies transformed into leeches that attached themselves and began to drink blood, supermarkets felt the pain and realized something was wrong.

Thus, regional chain supermarkets have been laying out community group buying, leveraging their years of goodwill, compatible supply chain and warehousing systems, and natural pickup locations to counterattack, striving to create a new "store commerce" integrated group buying model. In 2021, community group buying will become a standard configuration for all chain supermarkets and convenience stores.

However, the road for chain-store-led community group buying is long and arduous; the pitfalls will not be fewer. 99% of supermarkets will fail to find the right approach, falling into the trap of "a dog biting a hedgehog—mouth full of blood."

-07- The "Feast" of Internet Kings In the second half of 2020, internet stars such as Meituan, Duoduo, Didi, JD.com, Alibaba, SF Express, and Tencent (which had already made early moves) shone brightly, entering community group buying with unwavering steps. Those who should come came, and those who shouldn't also came.

However, contrary to expectations, after a series of maneuvers, the heroes of yesteryear are showing signs of decline. Jingxi Pinpin brought no surprises, and Hema Market gave no miracles. Alibaba's continued investment in Shihuituan, JD.com's backing of Xingsheng, and various signs within the track indicate that these two behemoths are highly likely to shift from front-stage to backstage in 2021, giving up their athlete identities to become coaches and arms dealers.

Kangaroo King (Meituan) is setting its own pace to aim for the championship, vying with Xingsheng, the track's leader, for supremacy in the community group buying arena in 2021.

Meanwhile, those who were once on the same starting line are gradually falling behind, caught in a dilemma, agonizing over whether to survive humbly or die miserably.

-08- Manufacturers Embrace Group Branding In the community group buying track, even as giants enter like dumplings being dropped into a pot, manufacturers who "won't shoot without a target" are still hesitating: to follow or not to follow?

By 2021, all FMCG and daily necessities manufacturers will shift from the "to do or not to do" mindset to the "how to do" stance, using branding, specifications, or packaging to differentiate from products in other channels, creating exclusive group channel brands.

Embrace the Era of Group Brands: Are You Ready?

  1. The necessity and urgency of group brand building, transmitted from the bottom up along the value chain, brings brand manufacturers to another critical decision point.
  2. The influence of macro-environmental factors such as the domestic circulation economy leading transformation, urbanization (high-speed rail promoting urban-rural integration), population aging, internet technology innovation, stricter national policies and regulations, and the rise of self-media—community group buying has no foreign benchmark model; it is an original, independent, wild new retail format.
  3. Product strategy research from two dimensions: the interaction strength between category and channel trends (community group buying is not just about selling vegetables).
  4. Three pillars of product development: user needs, competitive orientation, and enterprise resource matching.
  5. In organizational building, group brands with obvious channel characteristics can share the marketing department with traditional e-commerce and the channel department with KA supermarket departments; when to establish an independent system is determined by operational rhythm.
  6. The success or failure of group brands lies not externally but internally (breaking internal existing solidified patterns).
  7. Group brands are user-scenario brands, not channel brands (channels have products, not brands).

In 2021, it is time for manufacturers to embrace the group era and build group brands.

-09- Food Safety: A Black Swan That May Fly in at Any Time Time flies, winter goes and spring comes. The arrival of spring brings not only the scent of hormones but also rising temperatures. The continuous rise in temperature will truly test platforms' logistics, warehousing, and distribution capabilities. With mixed loading and transport of frozen, chilled, fruit and vegetable, and ambient products in warehousing and distribution, the sword of Damocles of food safety hangs overhead and may fall at any time, potentially striking every platform. A small misstep could have devastating negative consequences. This is probably why the industry has always joked, "By July, the winner will be clear!"

Food safety is not a matter for one platform alone; it is an event that could overturn the entire industry's survival. From 2016 to 2020, the community group buying format grew robustly amid doubts but never faced a catastrophic survival test. Among all potential threats, food safety is the biggest hidden danger, concerning life and health, social stability, and national welfare. In 2021, no matter how much it is strengthened, it cannot be overemphasized.

From April 1-3, during the Spring Sugar Fair, New Distribution organized a channel innovation conference themed around the opportunity of emerging channels, specifically to help manufacturers who lack resources and methods, and platforms that lack products, understand these platforms and hopefully bring cooperation opportunities. Interested friends should not miss it. Here are the details: