Source: Bolin New Retail (ID: bolinxls) Author: Li Baolin | Brother Bao
In 2021, "magic" and "myth" coexisted. Hegel said, "For a permanent goal, one must endow an eternal memory." 2021 was a seemingly ordinary year for the community group buying track, but it was also extraordinary. This year, community group buying practitioners experienced struggle and loss, calm and sadness, surprise and restlessness. It was a time of tempering and rebirth!
In the second half of 2020, internet giants entered the community group buying track with capital. After a round of crazy burning money, the industry entered a new development stage in 2021. In this new stage, strict regulation, elimination rounds, major reshuffling, and new rises became the main themes of community group buying e-commerce...
At this moment when "comedy" and "tragedy" alternate, how to summarize and view the 2021 community group buying track? I offer 8 key words:
Growth The first word is growth, though there are different voices in the industry. I give the word growth based on 4 dimensions:
1. The overall scale of the industry track has grown significantly compared to 2020; this is a fact. Although the head capital groups did not reach the initial target of 530 billion yuan, compared to 2020, the scale of a single capital group has already surpassed several times.
2. The number of industry practitioners has increased significantly. Currently, community group buying infrastructure has been laid out in 300+ prefecture-level cities. This is a huge commercial chain that requires tens of millions of practitioners to drive its operation. Most nodes were completed from October 2020 to July-August 2021, which is remarkable.
3. The number of brand manufacturers entering community group buying has increased significantly. In 2019, most enterprises entering the track were at the tens of millions level; in 2020, they were at the 300-500 million level; this year, basically all leading FMCG companies have entered, which alone is sufficient proof.
4. Resource providers are still entering continuously. For example, real estate property companies, official media, and state-owned enterprise tertiary industries are all waiting for opportunities, eyeing the market.
Strict Regulation The second word is strict regulation. Strict regulation can be said to be the main theme of the track in 2021.
From the "Nine No's" issued by the State Administration for Market Regulation and the Ministry of Commerce on December 22, 2020, to the fines of 1.5 million yuan and 500,000 yuan imposed on Duoduo Maicai, Chengxin Youxuan, Meituan Youxuan, Shihui Tuan, and Shixiang Hui on March 3, 2021, and then on May 27, Shihui Tuan was again fined the maximum 1.5 million yuan for the same reason and ordered to suspend operations in Jiangsu for 3 days.
On July 2, the State Administration for Market Regulation held a price monitoring briefing on illegal low-price dumping in community group buying, with 7 giants attending and signing commitment letters. On November 12, the State Administration for Market Regulation responded to the motion of NPC representative Li Guowei, and on November 18, the State Anti-Monopoly Bureau was established.
It can be said that throughout 2021, community group buying was on the road of learning and adjusting business under relevant national laws and regulations.
Differentiation The third word is differentiation. Instead of using "reshuffle," differentiation means some are happy and some are worried, some advance and some retreat. There are 5 dimensions:
1. Capital groups are differentiating. From the top 8 capital groups in 2020, it has transitioned to 8 into 6, 6 into 5, 5 into 4. Currently, a battle among the top 4 community e-commerce groups is highly likely.
2. Suppliers are differentiating. Overall product category resources are gradually concentrating toward the top 5 suppliers, whether in terms of brands, slots, resource positions, or product scheduling cycles.
3. Group leaders are differentiating. IP group leaders and pickup point group leaders are going their separate ways.
4. Grid warehouses are differentiating. In some regions, grid warehouses are beginning to show trends of organization and collectivization because individual grid warehouses generally do not make profits.
5. Local groups, group wholesalers, and capital groups are operating in a differentiated manner.
Helping Farmers The fourth word is helping farmers. The reason for this word is that it is the value of the entire track, the industry connotation advocated and affirmed by the state, and it will affect the future direction and value boundary of community group buying.
From Duoduo Orchard and Surprise Farm, to the People's Daily affirming Alibaba's community e-commerce contributions to helping farmers and agriculture and solving fresh agricultural product circulation solutions on December 7, and CCTV News reporting on December 9 that Meituan's community e-commerce played a positive role in enriching and improving people's美好 lives, it can be seen that the state and society have expectations and standards for community group buying.
Return The fifth word is return. I give the word return based on 3 dimensions:
- Track players have shifted from competing with capital and subsidies in the second half of 2020 to competing in operations; this is due to the environment and also forced by it.
- The overall value judgment of the track has shifted from excessive pursuit of GMV and market share to pursuit of gross profit, profit, and moderate scale.
- The focus of track players has shifted from external to internal, and the competitive environment has become more stable.
Rationality The sixth word is rationality. There are 4 dimensions to rationality:
- After experiencing the black quarter of July-August-September, media reports on community group buying have gradually become more rational, neither exaggerated nor narrow, increasingly following business facts.
- After various practices such as flood relief, epidemic prevention, and rural revitalization, the state has seen and remembered the positive contributions of community group buying, and regulatory policies have begun to combine toughness with flexibility.
- After capital cooled down, the business operations of track players have gradually become stable.
- The practitioner group has gradually become more steady after experiencing ups and downs.
Transformation The seventh word is transformation, not exit. The two have different stances. There are 5 dimensions:
1. Capital groups are transforming. Whether due to circumstances, self-rescue, or business adjustment, I call it transformation, not discussing the outcome. For example, Chengxin launched Chengxin Pi, Shihui Tuan launched an agency system for non-core markets, Meituan comprehensively raised gross profit, Taocaicai focused on 6 core provinces, and Duoduo increased gross profit for some categories while maintaining growth. These are all transformation measures taken in the new environment.
2. Local groups are transforming. The few remaining local groups have basically abandoned the low-end market and begun transitioning to mid-to-high-end quality community groups, which is a correct direction.
3. Group wholesalers are breaking circles, moving on the road of new supply, serving traditional circulation distributors in third- and fourth-tier markets.
4. Grid warehouses are transforming. Since grid warehouses generally do not make profits, they are basically seeking a second growth curve.
5. Group leaders are transforming. Currently, outstanding group leaders are moving toward professionalization and specialization.
Rise The eighth word is rise. After 5 years, the community group buying format has iterated and evolved with a half-year cycle. Amid the dramatic ups and downs of capital groups, local groups, and group wholesalers, some segmented formats have gradually risen to prominence:
1. Rise of new store commerce 2. The hurricane of Kuaituantuan 3. Property group buying is in the ascendant 4. Private domain e-commerce for agricultural products is spreading rapidly
2021 has passed, and 2022 has arrived. It is said that 2021 was the worst year and also the best year of the next decade. Amid this era of change, I still believe next year will be better!
Everything can be grouped, and everyone wants to group. This is the greatest core asset left to us practitioners in the community group buying track over the past 5 years.
2022 is the beginning of another 5 years. The old world is collapsing, and the new world is rising. As the morning glow rises, I hope to meet you, my fellow traveler, and have the time and opportunity to see the rainbow of the galaxy!
It is not because you see it that you believe, but because you believe that you will see it!
Looking forward to walking together for the next five years.
Are you "watching" me?