Click to read the original article for details What is the community business model? It is a retail model based on a 1-2 km radius of a community, providing daily consumer goods and home services to residents through online and offline channels. This business model is a massive commercial opportunity both now and in the future. Especially against the backdrop of normalized pandemic control, community commerce that meets "doorstep" consumption needs has become one of the most watched and improvable business types. Community group buying, which has risen in recent years, is naturally one of the most talked-about. 01 The essence of community group buying is still a retail format Three years of pandemic have profoundly changed users' consumption habits and information acquisition habits. "For humans, disease has always been the most terrible killer and a key player in shaping history." This is a maxim from Guns, Germs, and Steel, and it hits the nail on the head, explaining the reshaping of consumption patterns under the complex pandemic. However, in an environment where the pandemic has driven community group buying to improve, it was recently exposed that JD.com's Jingxi business group under JD Retail will be dismantled within this month, with existing business lines expected to be integrated into other similar business groups by the end of June. Among them, Jingxi App, Jingxitong (formerly JD New Channel), and Jingxi Pinpin will be merged into JD Retail. We noticed that in the adjustment of Jingxi, Jingxi App, Jingxitong (formerly JD New Channel), and Jingxi Pinpin will be merged into JD Retail. Is community group buying really failing? Or has it regained new vitality under the pandemic? If the giants leave this battlefield, is there still a possibility for it to be reignited? In a live broadcast at the end of May, we invited Li Bin, founder of Keke Select Community Retail, who shared a new species based on community services and integrating various retail characteristics: community group-buy convenience stores. Taking the advantages of community group buying and community retail, and fully leveraging the retail form of community group buying, we call it "community group-buy convenience stores." "In the six months of repeated and uncertain pandemic, we added 15 community group-buy convenience stores, and the operating data was better than we expected," Li Bin told New Distribution. 02 Community group buying is an optimization of community retail In Li Bin's view, community group buying is a process of optimizing community retail. What does that mean? ▶ [Product Structure Optimization] There are many mom-and-pop stores in communities. On a street or in a community, there may be four or five such convenience stores or medium-sized supermarkets. In these retail stores, Li Bin found several problems: 1 Severe product homogenization 2 Problems with frozen product structure Among the four or five convenience stores in the same community, from the product structure of snacks, fresh produce, and frozen products, the similarity is very high, and homogenization is severe. For consumers, there is almost no difference between the four or five convenience stores, and customer service is also similar. Secondly, in a 150-square-meter store that Li Bin took over, there were three or four large freezers, but the frozen products were all summer items like ice pops and ice cream. After taking over, Li Bin first planned the categories, reduced SKUs, and brought KA supermarket products into the retail store. For the same category, only bestsellers were stocked. For example, functional drinks were reduced from four categories to one, keeping the best-selling one, which improved turnover. Then, three-quarters of the ice pops in the freezers were removed and replaced with frozen products like prepared dishes, steaks, and chicken cutlets, enriching the frozen SKUs. Sales in that month improved significantly. ▶ [Supply Chain Optimization] Many people think that community group buying supply chains are difficult to manage. Many platforms have retreated, laid off staff, or gone bankrupt largely due to supply chain issues. Damage and unsold inventory happen every day, and even losses exceed controllable ranges. Optimizing the supply chain is of paramount importance. More platforms have started to establish grid warehouses, which are transfer points linking community group buying platforms and offline service stores. They play an important role in connecting the upper and lower levels, relieving the sorting pressure of large warehouses. So, at that time, whether it was the new three groups or the old three groups, they were all vigorously promoting grid warehouses. The entire chain of central warehouse - grid warehouse - group leader, if the central warehouse is the center of a large area, then the grid warehouse is the execution unit for a small area. If under the premise of "demand exceeds supply," grid warehouses can indeed improve the efficiency of the entire chain's fulfillment, truly achieving "cost reduction and efficiency increase." As it evolved, grid warehouses gradually became a "transfer + self-pickup" model. Taking Li Bin's grid warehouse as an example, he turned it into a veritable offline convenience store, "transfer + pre-sale + self-pickup." Through pre-sale and self-pickup, it can achieve a "cash flow" payment method, improving capital turnover, while also reducing store opening costs. Merchants just need to find the right "group leader." So strictly speaking, Li Bin's grid warehouse is also a terminal store. It has high-quality local supply chain resources, basic group leader resources and warehousing and distribution capabilities, group leaders with team management experience, and a terminal sales model. But at the same time, a problem arises: this places high demands on the speed of product iteration. It must be more and faster, and the consumption radius must also be shortened. ▶ [Consumption Radius Optimization] Xu Zheng, founder and CEO of Miss Fresh, once said in a speech: "The opportunity for new retail lies in better meeting the shopping needs of segmented scenarios. Only by putting people first can we do new retail well." Three years of repeated pandemic have had a significant impact on the community retail model. In terms of consumption scenarios, retail around community groups has spawned fission momentum. "Being close enough to consumers" is a phrase Li Bin repeatedly mentioned in the live broadcast. Indeed, because people in the same community share the same living radius and a relatively familiar social environment, the community acts as a pipeline that efficiently aggregates "information flow, logistics, and people flow." The benefit is that low-cost, precise, and fast customer acquisition becomes possible. Li Bin gave several examples in the live broadcast: One morning, they prepared early to distribute flyers in the community, but when it was time for the elderly to exercise outside, they found very few people. Then they received a call to return to the store quickly. When they got back, they found it packed with people. Clearly, the community's "word of mouth" spreading ability showed Li Bin greater possibilities. So his store locations are all in residential areas. Even if there is a pandemic and the community is locked down, goods can still be sold. Consumers can buy things in slippers and pajamas. Li Bin once ran a simple dragon fruit group buy, and quickly got 1,000 orders in a day. Later, when making promotional posters, printing ten copies was enough. Even when there were no promotions, many mothers would come to the store after work to see if there were discounts or novel vegetables, fruits, and snacks. Li Bin is not surprised by such user reactions. The pandemic has done market education, and consumers' dependence on community retail will only increase. Under the pandemic, community retail stores including community supermarkets, convenience stores, and wet markets closed down, and normal retail channels suddenly failed. But soon, many community stores took on the roles of "supply guarantee channels" and "group buying channels," continuing to serve the community in another way. From this perspective, the combination of community group buying and retail is also a breakthrough in "people, goods, and scenes," becoming a new retail scenario facing the community. 03 The evolution of retail models is getting closer to consumers It can be seen that Li Bin's community group-buy convenience store model finds a balance between physical stores and online shopping, extracting the advantages of both and combining them. Before this, community group buying and community retail were somewhat competitive, but this pandemic has allowed the two retail formats to achieve a more integrated coexistence. This integrated coexistence acts as a magnifying glass, making the advantages of "more, faster, better, and cheaper" more prominent and clearer. Like Li Bin's model, it has the advantages of hypermarkets: many SKUs; the advantages of group buying: cheaper prices; the advantages of small stores: fast delivery; and continuously introducing novel products: good products. So the four words "more, faster, better, cheaper" are deeply operated according to consumption scenarios. Speaking of "scenario-based deep operation," this is also one of Li Bin's profit points. For example, in the breakfast consumption scenario, first, a hand-grabbed pancake is pre-sold online with a very low profit margin. What is the purpose? To attract traffic. After using low prices to gain a certain number of online customers, product combinations are introduced, such as pairing the pancake with spreads and boxed eggs. Why boxed eggs? Because boxed eggs have higher profit margins than loose eggs, which invisibly balances profits. So, based on specific consumption scenarios, low-price online customer acquisition and high-price offline profit not only win consumer praise, but more importantly, its operating model uses single-product highlights for point breakthroughs and vertical deep operation, building core competitiveness. During the live broadcast, there was a comment in the comment section: Such community group buying becomes a more human touch community group buying, enhancing interactivity and continuity. Indeed, from the operating model perspective, Li Bin's model distinguishes itself from traditional community group buying. From another angle, we also see more possibilities derived from community group buying. It is said that community group buying has entered the second half. What is the "second half"? In these years of ups and downs, it rose with the pandemic and changed with the pandemic. Now it has been split into multiple segmented tracks. Capital groups' community e-commerce, local groups' community group buying, chain supermarket group buying, independent groups for wholesale, and property group buying in real estate e-commerce, each track decides its operating model based on local market conditions. It can be said that a hundred flowers bloom and each shows its prowess. Li Bin's operating model is one such sample. This development direction is undeniable. The pandemic accelerated industry growth and market education. Survival of the fittest, there is no need to be confined to rigid models. Society is iterating, the market is iterating, and every internet iteration is a "catalyst" for business models. The SARS outbreak in 2003 gave birth to the development of e-commerce; the transformation of the internet economy in 2019 aimed at community group buying; the pandemic in 2020 accelerated the development of retail models. We find that every change is about finding an entrance closer to users. E-commerce allows users to buy from around the world without leaving home, while the current segmented community retail model coordinates online and offline, more directly delivering goods to people, more quickly sending items to users' doorsteps, and getting closer to users. We see the evolution of retail formats gradually approaching consumers. Retail is currently China's largest industry, with a scale of 40 trillion yuan, but great wealth is sought in danger, and competition is fierce. Perhaps the future will be a borderless era, which will mean that whoever is closer to consumers will have greater initiative and voice. Interested friends must not miss it! -END-